Crypto · updated 1h ago · 3 min read
Federal Reserve Opens Public Comment On GENIUS Act Stablecoin Reserve And Capital Rules
Fed proposes two GENIUS Act rules: reserve backing and capital requirements for issuers. Public comment window open 60 days after publication.
16 outlets told this the same way.
10 of 12 outlets skipped it: fed proposal includes monthly reserve reporting certified by CEO and CFO..
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Fed Proposes GENIUS Rules
The Federal Reserve Board opened public comment on two proposed rules to implement the GENIUS Act for payment stablecoin issuers it supervises, and it said the proposals were released Thursday in a press release.
The first proposal would require board-supervised payment stablecoin issuers to fully back their stablecoins with certain permissible reserve assets, establish standardized capital requirements, introduce risk management standards, and clarify permissibility of stablecoin and related activities for board-supervised banks.
The second proposal would establish a tailored application process for board-supervised banks applying to issue payment stablecoins and would create a process governing appeals, hearings and final determinations for applications.
Michael S. Barr said the proposal would be useful for public input on reserve asset limitations and capital requirements, and he said it should address interest rate and foreign currency risks.
The Fed said it will accept comment on the proposals for 60 days after their publication in the Federal Register, and it said the publication of the proposals was approved in unanimous board votes.
Capital, Reserves, Redemption
The Federal Reserve proposed a reserve and capital framework for Fed-supervised issuers that would require holding at least one dollar of permissible reserve assets, including short term Treasury bills and other high quality liquid instruments, for every dollar of stablecoin outstanding. The Fed proposed a sliding scale capital charge, including a 2% capital charge on an issuer's first $20 billion in outstanding stablecoins and a 1% charge on amounts above $50 billion. The Fed proposed a two business day window for issuers to process redemptions, and it tied the framework to stress conditions by saying stablecoins must be reliably and promptly redeemed at par.
Michael Barr said, "Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions," and he said the range includes market stress and episodes of strain on the issuer or its related entities. The Fed also proposed that if reserves fall below required one to one backing, an issuer would have to notify the Fed and either restore reserves under a remediation plan or liquidate them and redeem outstanding stablecoins.
Applications and What Comes Next
The Federal Reserve proposed a separate application process for Fed-supervised banks seeking approval to issue payment stablecoins through subsidiaries, and it said applicants would submit a business plan and financial information. The Fed proposed procedures for appeals, hearings and final decisions on stablecoin applications, and it said the proposals are open for public comment for 60 days after publication in the Federal Register. The Fed said the GENIUS Act required U.S. banking regulators and the Treasury Department to implement rules by July 2026, and it said the agencies have broadly exceeded that deadline while making significant progress in recent months.
Austin Campbell, an adjunct professor at New York University’s Stern School of Business, said the rollout of a stablecoin framework under the GENIUS Act deserves more attention than the CLARITY Act. Barr said in a statement that further work would be required for stablecoins to become reliable payment instruments, and he emphasized public feedback on whether the framework adequately addresses interest rate and foreign currency risks.