The Federal Reserve has proposed new rules for stablecoin issuers, requiring full backing of tokens with eligible assets. This announcement was made on Thursday as part of developing a regulatory framework for stablecoins under the GENIUS Act – the "Guidance and Development of National Innovations in Stablecoin in the USA," passed last year. The first proposal requires stablecoin issuers, overseen by the Board, to fully back their tokens with safe, liquid assets, such as short-term treasury bonds, in a ratio of at least 1:1, and to hold capital against operational and credit risks. Separately, it introduces a ban on paying yields or interest solely for holding digital tokens. The second proposal creates a specialized application process for insured banks – members of the Federal Reserve System, who wish to issue stablecoins, including the requirement to provide a business plan, financial statements, biographical information, and documentation on capital structure.
The Fed's actions coincide with coordinated initiatives by other regulators – the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. Collectively, these measures aim to ensure strict operational standards before the statutory enforcement deadline of the GENIUS Act, which takes effect no later than January 2027.
Despite progress in regulation, high-ranking officials pointed out key areas needing refinement before final rules are adopted. Federal Reserve Governor Michael S. Barr emphasized that stablecoins must remain redeemable at face value during periods of market instability and expressed concerns about potential limitations on enforcement powers regarding violations of anti-money laundering banking laws. Both proposals will be open for public comment for 60 days following publication in the Federal Register. It is expected that investors and service providers in the digital asset space will closely monitor the comment period, as final decisions will determine compliance standards and operational costs for institutional participation in the emerging stablecoin sector.
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