Federal Reserve stablecoin regulatory framework

The Federal Reserve has proposed a regulatory framework under the GENIUS Act targeting payment stablecoin issuers supervised by the Board. The proposals would require full backing with permitted reserve assets, including short-term Treasury bills and other high-quality liquid assets, and would impose standardized capital requirements to cover credit and operational risks along with broader risk-management standards.

The Fed also proposed separate requirements for firms that safeguard stablecoin reserves and outlined a tailored application process for Board-supervised banks seeking approval to issue payment stablecoins, requiring business plans and financial documentation and establishing procedures for appeals, hearings and final decisions. The proposal builds on earlier GENIUS Act implementation work and market commentary notes it could create a more structured, potentially supportive environment for crypto products, with observers citing possible effects on Solana markets and naming actors such as Jerome Powell and the Solana Foundation as influential to implementation and reception.

Capital, redemption and reporting rules

The new proposals add precise operational details to the Fed’s GENIUS Act implementation: an operational‑risk capital schedule of 2% for the first $20 billion of stablecoins outstanding, 1.5% for the next $30 billion and 1% above $50 billion, plus additional capital tied to credit and operational exposures. Issuers would generally be required to complete redemptions within two business days, and must notify the Fed if reserves fall below required one‑to‑one backing, then either restore reserves under a remediation plan or liquidate reserves and redeem outstanding tokens. Monthly disclosures of outstanding tokens and reserve composition would be mandatory, subject to review by a registered public accounting firm and certification by the issuer’s CEO and CFO. The proposals confirm a 60‑day public comment window after Federal Register publication and sit alongside coordinated rules from other agencies as part of the GENIUS Act rollout.

Fed Governor Michael Barr endorsed the move but stressed that stablecoins must remain redeemable at par even under market stress, raised questions about whether the draft sufficiently addresses interest‑rate and foreign‑currency risks, and urged feedback on supervisory authority limits tied to anti‑money‑laundering enforcement.