Federal Reserve proposes stablecoin rules, including Treasury bill reserves and bank application process

The Federal Reserve has proposed rules that would require stablecoin issuers to back tokens with “high-quality, liquid assets” such as Treasury bills, while also setting up an application process for banks that want to issue stablecoins. For PSPs, acquirers, and banks in high-risk verticals, the point is straightforward: the Fed is moving the reserve and licensing rules closer to something that can actually be underwritten.

1. The proposal would impose capital requirements on issuers to address credit and operational risks, along with risk management standards. It also sets rules for Federal Reserve-supervised firms that safekeep the assets backing stablecoins.
2. For banks, the Fed would create a process covering appeals, hearings, and final determinations for applications to issue stablecoins. That matters because the application path is often where “permission” becomes a lot more conditional than the marketing language suggests.
3. Fed Gov. Michael Barr said the framework needs “strong guardrails and consumer protections” so stablecoins can “foster payments improvements that benefit households and businesses.” He added that stablecoins can only be stable if they can be “reliably and promptly redeemed at par in a range of conditions,” including during market stress and periods of strain on the issuer or related entities.
4. The proposal comes under the Genius Act, which required federal regulators and the Treasury Department to establish regulations by July. In other words, the Fed is late on the deadline, while the rest of the market is still waiting to see what the operational rulebook actually looks like.
5. The Office of the Comptroller of the Currency and the National Credit Union Ad... are also part of the federal regulatory process referenced in the article, but the excerpt does not provide further details on their actions.