The Federal Reserve has released a draft rule package that would tighten capital, reserve and redemption standards for stablecoin issuers under its supervision, advancing the requirements set out in the GENIUS Act.
Tiered Capital Requirements
Under the proposal, stablecoin providers would incur an operational-risk capital charge that scales with the amount of tokens in circulation. The first $20 billion of outstanding stablecoins would attract a 2 percent charge, the next $30 billion would be subject to a 1.5 percent charge, and any amount exceeding $50 billion would be charged at 1 percent. In addition to this baseline charge, issuers would need to hold extra capital to cover credit and other operational risks, ensuring that larger programs maintain proportionally higher buffers.
Faster Redemption and Reserve Backing
The draft mandates that issuers process redemption requests within two business days, reinforcing the expectation that stablecoins remain fully redeemable at par even during market turbulence. If an issuer’s reserves fall short of the one-to-one backing required by the GENIUS Act, the regulator would be notified and the firm would have to either remediate the shortfall or liquidate assets to meet outstanding obligations.
Enhanced Transparency and Reporting
Stablecoin issuers would be required to file monthly disclosures that detail the total supply of their tokens and the composition and value of the reserves supporting them. These reports must be audited by a registered public accounting firm and signed off by the chief executive and chief financial officer of the issuing entity. The Fed also plans to create a formal application process for banks seeking approval to issue payment-stablecoins through subsidiaries, which would include submission of a business plan and detailed financial data.
Public Comment and Timeline
The Federal Reserve has opened a 60-day comment period following the publication of the proposal in the Federal Register. Feedback from industry participants and other stakeholders will be considered before final rules are issued. The GENIUS Act stipulates that the new framework becomes effective on January 18 2027, or 120 days after the final rules are published, whichever occurs first.
Why it matters
By introducing tiered capital charges, tighter redemption windows and mandatory monthly reporting, the Fed aims to bolster confidence in stablecoins as reliable payment instruments. The measures address concerns about liquidity under stress, reserve adequacy and systemic risk, potentially shaping how stablecoins are issued and used across the broader financial system.
