Overview
- The Federal Reserve has proposed regulations mandating that payment stablecoin issuers under Board supervision must fully back their tokens with allowable assets, such as short-term Treasury bills, and adhere to capital requirements, risk management standards, and reserve safekeeping rules.
- A separate proposal aims to establish a customized application process for banks supervised by the Board that wish to issue stablecoins, including provisions for appeals and hearings; the public comment period will last for 60 days following the publication in the Federal Register.
- This initiative is part of the broader implementation of the GENIUS Act, which involves contributions from multiple agencies, including the Office of the Comptroller of the Currency (OCC) and the Treasury's regulations on noncompliant stablecoins.
The Federal Reserve is taking significant steps towards regulating stablecoin issuers, announcing on Thursday that these entities must fully secure their tokens with safe and liquid assets while maintaining capital to cover operational risks.
The central bank has opened two proposals for public feedback as it develops the regulatory framework required by the GENIUS Act, a law signed by President Donald Trump in July 2025.
The first proposal mandates that payment stablecoin issuers under Board supervision maintain their reserves solely in permissible assets like short-term Treasury bills and other high-quality, liquid investments. Additionally, it would implement standardized capital requirements to mitigate credit and operational risks, establish risk management standards, and define rules for the safekeeping of the assets that support the tokens.
The second proposal introduces a specialized application process for banks under Board supervision that intend to issue payment stablecoins. This process will require submission of a business plan and financial documentation, along with procedures for appeals, hearings, and final decisions.
The comment period will close 60 days after the proposals are published in the Federal Register.
Stablecoins are blockchain-based tokens designed to maintain a stable value by linking to a reference asset, typically the U.S. dollar, with issuers backing them through reserves to ensure each token can be redeemed at its nominal value. These tokens have become essential in the cryptocurrency ecosystem, facilitating transactions between exchanges, trade settlements, cross-border payments, and serving as a temporary holding for funds without reverting to traditional currencies.
This regulatory development is part of the broader rollout of the GENIUS Act, which establishes the first federal guidelines for dollar-pegged tokens. The Office of the Comptroller of the Currency is working to finalize its own stablecoin regulations by November in anticipation of a January deadline, while the Treasury Department has proposed rules to prevent platforms from offering noncompliant stablecoins to U.S. customers.
The introduction of these rules coincides with the growing acceptance of stablecoins in mainstream finance, as the Trump administration increasingly promotes dollar-pegged tokens as a mechanism to enhance the global dominance of the dollar.
Ensuring full-reserve backing and bank-level oversight is crucial to this strategy, aimed at guaranteeing the stability of the tokens and their redeemability at face value.