Federal Reserve Unveils Two Proposals for Stablecoin Issuers Under GENIUS Act
Highlights
- The Fed has released two proposals has it moves to implement the GENIUS ct.
- The first proposal would require stablecoin issuers to provide full reserve backing for their stablecoins.
- The second proposes rules for supervised banks looking to issue stablecoins.
The U.S. Federal Reserve has released two proposals as it looks to implement the GENIUS Act and create a regulatory framework for stablecoin issuers. The first concerns reserves for these issuers, while the second focuses on rules for banks that want to issue stablecoins.
Federal Reserve Unveils Two GENIUS Act Proposals
In a press release, the Fed requested public comment on two proposals toward establishing a regulatory framework for stablecoin issuers under the GENIUS Act. The comment period for these proposals will last for 60 days following the publication in the Federal Register.
The first proposal focuses on the reserves that the stablecoin issuers will hold to fully back their stablecoins. It proposes that these issuers hold certain reserve assets such as short-term Treasury bills and “certain other high-quality, liquid assets.”
Furthermore, the Federal Reserve noted that the proposal would establish standardized capital requirements to address certain risks involved in payment stablecoin activities. Meanwhile, it would introduce rules for firms that safekeep the reserves for these GENIUS Act-compliant stablecoins. It would also clarify how Board-supervised banks can engage in activities involving these stablecoins.
This move comes as relevant agencies move to implement the GENIUS Act. Last month, the U.S. Treasury also called for public comments related to the issuance and offering of stablecoins in the U.S.
Proposal To Let Banks Issue Stablecoins
The second proposal outlines rules for Board-supervised banks looking to issue their stablecoins. Specifically, it would establish an application process for these banks when applying to issue their payment stablecoins.
As part of the application process under the GENIUS Act framework, the Federal Reserve would require these banks to submit a business plan and financial information, along with other documents. Meanwhile, the proposal would also create a process governing appeals, hearings, and final determination for applications.
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