The Federal Reserve has released two proposed rules tied to the GENIUS Act, opening a new phase in how payment stablecoin issuers and banks that want to issue them could be supervised in the United States.
One proposal would set operating standards for Fed-supervised payment stablecoin issuers, while the other would establish the application process for supervised banks seeking approval to issue payment stablecoins. Public comments on both proposals will be accepted for 60 days after they are published in the Federal Register.
Reserve backing and risk controls
The first proposal would require payment stablecoin issuers supervised by the Fed to fully back their tokens with approved reserve assets. The list described in the proposal includes short-term US Treasury bills and other high-quality liquid assets.
Beyond reserve backing, the rule would introduce capital requirements aimed at credit and operational risks connected to stablecoin activity. It would also add broader risk-management standards for issuers operating under Fed supervision.
The proposal further addresses firms that hold the assets backing stablecoins and clarifies which stablecoin-related activities would be permitted for banks supervised by the Federal Reserve.
Rules for banks seeking to issue stablecoins
The second proposal is focused on applications from supervised banks that want to issue payment stablecoins. Under the draft framework, applicants would need to submit business plans, financial information, and other required documentation.
The proposal also lays out procedures tied to those applications, including how appeals and hearings would be handled. In effect, the rule is designed to define the formal path a supervised bank would follow if it seeks to enter payment stablecoin issuance under the GENIUS Act framework.
Barr highlights redemption and transparency
Federal Reserve Governor Michael Barr said payment stablecoins must be redeemable quickly at full value, including during periods of stress. His comments framed redemption reliability as a core principle behind the proposed standards.
Barr also backed the rulemaking as a step within the GENIUS Act structure. He pointed in particular to the importance of limits on reserve assets and to transparent, standardized capital requirements for stablecoin activities.
At the same time, he said the Fed is seeking public input on how the rules should address interest rate risk and foreign currency risk, signaling that those areas remain part of the consultation process rather than settled policy.
What comes next
The proposals are not final rules. Their immediate next step is the public comment period, which will run until 60 days after publication in the Federal Register.
That process will give industry participants and other interested parties an opportunity to respond to the Fed’s approach to reserves, capital, bank applications, and risk management before the central bank decides whether to adopt final requirements under the GENIUS Act.
Source: cryptopotato.com