The Federal Reserve has proposed two new rulemaking packages for payment stablecoin issuers under the GENIUS Act. Under the plans, Board-supervised issuers would be required to fully back their tokens with permitted reserve assets and adhere to standardized capital and risk-management requirements.
The first proposal specifies that outstanding tokens must be fully backed by permitted reserve assets such as short-term Treasury bills and other high-quality liquid assets. It also introduces standardized capital requirements designed to cover credit and operational risks, alongside broader risk-management standards and rules for firms safeguarding reserve assets. For banks already under Federal Reserve supervision, the proposal clarifies permissible stablecoin-related activities.
The second proposal establishes a dedicated application process for Board-supervised banks seeking to issue payment stablecoins. Under this framework, institutions would need to submit an application that includes a business plan and financial information, while the structure would also create formal processes for decisions, hearings, and appeals.
Federal Reserve Governor Michael Barr supported the direction of the proposals while emphasizing the importance of clear redemption rights and strong safeguards to ensure stablecoins function reliably during periods of market stress.
The proposals are not yet final rules. The Federal Reserve has opened a 60-day public comment period following publication in the Federal Register.
