TheBlock
The Federal Reserve proposed requiring payment stablecoin issuers to fully back their tokens with short-term Treasury bills or other highly liquid assets. The plan also introduces standardized capital requirements, risk-management standards and a dedicated application process for Board-supervised banks seeking to issue stablecoins. The proposal is part of the federal rollout of the GENIUS Act, signed by President Donald Trump last year.
Why it matters
The GENIUS Act creates a federal framework requiring stablecoins to be backed by U.S. dollars or similarly liquid assets, with mandatory annual audits. The Fed's proposal would translate those requirements into operating standards for issuers and banks, potentially giving large regulated institutions a clearer path into the payment-stablecoin market.
The law has a January 2027 effective date, although the initial implementation deadline was set for July and agencies often take longer to finalize rules. The proposal therefore marks a significant step in defining how the law will work in practice, rather than a completed rulebook.
Market impact
Reserve requirements would shape how issuers manage liquidity and which assets can support outstanding stablecoins. Standardized capital and risk controls would add compliance costs, but could also strengthen confidence in dollar-backed payment tokens and create more consistent conditions across issuers.
Federal Reserve Governor Michael Barr supported the proposal while calling for stronger treatment of bank anti-money-laundering controls. He questioned whether limiting supervisory or enforcement action to deficiencies deemed significant or systemic could affect the Board's ability to enforce compliant programs. The final rules will determine how that tension is resolved before the 2027 effective date.
Frequently asked questions
-
What reserve assets would stablecoin issuers be allowed to use?
The proposal would require payment stablecoins to be fully backed by short-term Treasury bills or other highly liquid assets.
-
What new requirements did the Federal Reserve propose for issuers?
The Fed proposed standardized capital requirements, risk-management standards and reserve-asset requirements for payment stablecoin issuers.
-
Can Federal Reserve-supervised banks apply to issue stablecoins?
Yes. The proposal would create a specific application process for Board-supervised banks seeking to issue payment stablecoins.
-
When does the GENIUS Act take effect?
The GENIUS Act has a January 2027 effective date. Agencies are still developing the rules needed to implement its federal stablecoin framework.
-
What concern did Governor Michael Barr raise?
Barr supported the proposal but sought stronger anti-money-laundering safeguards. He questioned whether an enforcement threshold limited to significant or systemic deficiencies could weaken supervision.
CoinDesk
CoinTelegraph
WatcherGuru
Altcoin Daily
WuBlockchain