The Federal Reserve released two proposed rules for stablecoin issuers under the GENIUS Act, covering reserve backing and a new application process for banks. Both proposals open for 60 days of public comment once published in the Federal Register.
The Federal Reserve unveiled two proposed rules on Thursday to implement the GENIUS Act, the law setting up a federal framework for stablecoin issuers. The first proposal covers reserve requirements; the second sets an application process for banks that want to issue stablecoins.
Reserve rules require full backing
Board-supervised issuers must fully back their payment stablecoins with high-quality liquid assets, primarily short-term Treasury bills. Standardized capital requirements will also apply, buffering issuers against operational and credit risks.
New rules also cover firms that safekeep the reserves backing these stablecoins, and the proposal clarifies how Board-supervised banks can engage in stablecoin-related activities. It also prohibits issuers from offering yield or interest solely for holding the tokens.
A path for banks to issue stablecoins
A second proposal lays out a tailored application process for insured state member banks seeking approval to issue payment stablecoins through subsidiaries. Applicants must submit business plans, financial records, biographical reports and risk-management policies, along with documentation of their proposed capital structures.
Regulators also built in a process governing appeals, hearings and final determinations for these applications. Meanwhile, the Fed's move coincides with parallel rulemakings from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, as regulators work toward the GENIUS Act's statutory enforcement deadline, which takes effect no later than January 2027.
Both proposals will stay open for 60 days of public comment following publication in the Federal Register. Last month, the U.S. Treasury also sought public comment on stablecoin issuance under the same law.
Sources: Federal Reserve, CoinGape, Investing.com
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