Fed Proposes Reserve and Capital Rules for GENIUS Act Stablecoins
The proposal would require full backing with short-term Treasury bills or other highly liquid assets and create a standardized capital framework for issuers.
The Federal Reserve proposed reserve and capital requirements for payment stablecoin issuers Thursday, advancing rules that will shape compliance under the GENIUS Act ahead of its January 2027 effective date.
The proposal would require issuers to fully back stablecoins with short-term Treasury bills or other highly liquid assets. It would also establish standardized capital requirements and risk-management standards for issuers.
The plan includes a dedicated application process for board-supervised banks seeking approval to issue payment stablecoins. The GENIUS Act creates a federal framework for stablecoins, including full backing with U.S. dollars or similarly liquid assets and mandatory annual audits.
Federal Reserve Governor Michael Barr supported the proposal but raised concerns about anti-money laundering supervision. Barr said he wanted a standard limiting supervisory or enforcement action over an anti-money laundering deficiency to cases involving a “significant or systemic” issue.
He also warned that the standard could affect the Federal Reserve’s ability to verify that institutions maintain compliant programs. The proposed framework moves forward as federal regulators work toward implementing the law.
