Federal Reserve Proposes New Rules for Stablecoin Issuers
- The Federal Reserve’s proposal includes a capital charge of 2% on the first $20 billion in stablecoins outstanding.
- Issuers must maintain one-to-one reserves and can only hold cash, bank deposits, and short-term US Treasurys.
- Redemptions are required to be processed within two business days, with issuers needing to notify the Fed if reserves fall below requirements.
- Monthly reports on outstanding stablecoins and reserve composition must be published and certified by the issuer’s CEO and CFO.
- The GENIUS Act will take effect on January 18, 2027, or after final rules are issued by federal regulators.
These proposed regulations aim to enhance the stability and reliability of stablecoins as payment instruments, especially during market stress conditions. Fed Governor Michael Barr emphasized the need for universal redemption rights in final rules to ensure trust in these financial instruments.
Under the new framework, issuers face specific capital charges based on their total stablecoin issuance, highlighting a structured approach to risk management in the stablecoin sector. (Source)
