Fed Unveils Regulatory Framework for Stablecoin Issuers

The first proposal mandates that Fed-supervised issuers maintain full backing for their stablecoins using high-quality, liquid assets, specifically citing short-term U.S. Treasury bills. Beyond reserve maintenance, the draft establishes rigorous capital requirements and risk-management protocols designed to mitigate operational and credit hazards. These rules extend to firms responsible for safeguarding the assets, ensuring that stablecoin operations remain distinct from traditional insured bank deposits.

The second proposal outlines the procedural path for insured state member banks. Institutions must submit detailed business plans and financial data to their respective Federal Reserve Banks to gain authorization for a subsidiary-led stablecoin venture. The Fed has committed to a 30-day window to determine the completeness of these applications, with the GENIUS Act mandating a 120-day decision period once a filing is deemed complete. These regulatory developments arrive as major financial institutions, including Bank of America and Goldman Sachs, explore consortium-based digital dollar projects, aiming for a 2027 market entry.