The Federal Reserve has announced a set of proposed regulatory requirements for stablecoin issuers as it moves forward with the implementation of the GENIUS Act. This proposal includes new capital requirements, a two-day redemption window, and enhanced reserve disclosures.
Under the GENIUS Act, stablecoin issuers are mandated to maintain reserves that back their tokens on a one-to-one basis, with specific asset types permitted, such as cash and short-term U.S. Treasurys. The Fed's proposal aims to establish detailed capital, reserve-diversification, and risk-management standards.
The proposed capital charge for issuers would be tiered based on the amount of stablecoins outstanding, with additional requirements related to credit and operational risks. Issuers would also need to process redemptions within two business days and notify the Fed if their reserves fall below the required level.
Moreover, issuers would be required to publish monthly reports detailing their outstanding stablecoins and reserve composition, which must be certified by the issuer’s CEO and CFO. A separate proposal outlines an application process for banks supervised by the Fed to issue payment stablecoins through subsidiaries.
The public can comment on these proposals for 60 days following their publication in the Federal Register. Fed Governor Michael Barr emphasized the importance of stablecoins being reliably redeemable, especially during market stress, and called for feedback on the proposed framework.