Fed Proposes Two-Day Redemptions, Capital Rules for Stablecoin Issuers
The proposal would require risk-based capital, 1:1 reserve backing and monthly reserve disclosures as the GENIUS Act moves toward implementation.
The Federal Reserve proposed capital, reserve and redemption rules for payment stablecoin issuers Thursday, adding operational safeguards as the United States moves to implement the GENIUS Act.
The proposal would require Fed-supervised issuers to process redemption requests within two business days. Issuers would also maintain risk-based capital for credit and operational risks and follow broader risk-management standards.
The capital schedule would require 2% for stablecoin issuance up to $20 billion, 1.5% for the portion between $20 billion and $50 billion, and 1% for issuance above $50 billion. The requirements would apply in addition to the reserve backing required under the GENIUS Act.
If reserves fall below the required 1:1 backing, an issuer would have to notify the Fed and either restore reserves under a corrective plan or liquidate assets and redeem all outstanding stablecoins.
Issuers would disclose the amount of stablecoins in circulation, total reserves and reserve composition each month. A registered public accounting firm would audit the disclosures, which the chief executive officer and chief financial officer would certify.
Fed Governor Michael Barr said stablecoins must be reliably redeemable at par under all market conditions. The proposal would accept public comments for 60 days after publication in the Federal Register. The GENIUS Act is scheduled to take effect Jan. 18, 2027, or 120 days after final implementing rules are issued, whichever comes first.
