The Federal Reserve on Thursday proposed a new regulatory framework for payment stablecoin issuers under the GENIUS Act, moving dollar-pegged digital assets closer to a banking-style oversight model.

Under the proposals, stablecoins issued by Fed-supervised firms would be required to maintain full backing with approved reserve assets, including short-term U.S. Treasury securities and other high-quality liquid assets. The framework also calls for standardized capital requirements designed to address credit and operational risks.

The Fed's move comes as U.S. regulators work to implement the GENIUS Act, which established a federal framework for payment stablecoins. According to Reuters, the proposals would also create rules for banks that hold stablecoin reserves and clarify which stablecoin-related activities Fed-supervised banks may conduct.

Reserve and capital safeguards

The first proposal focuses on the financial and operational requirements for stablecoin issuers. Issuers would need to maintain reserves sufficient to cover their outstanding tokens and follow risk-management standards. The proposal would additionally establish requirements for firms that safeguard the assets backing stablecoins, with the aim of ensuring reserve assets remain available when holders seek redemption.

The Fed also put forward a separate application process for supervised banks that want to issue payment stablecoins. Applicants would need to provide information including business plans and financial details before receiving approval.

The proposals are now open for public comment for 60 days after publication in the Federal Register, giving issuers, banks, and other market participants a formal channel to weigh in before the requirements are finalized. The Fed's action represents another step in the broader U.S. effort to establish detailed rules for the rapidly expanding stablecoin market.

Focus turns to implementation

The regulatory approach could have implications for stablecoin issuers, banks, and financial firms seeking to participate in digital payments. By setting requirements for reserves, capital, custody, and approvals, the Fed is defining how regulated institutions can participate in the sector. Because the proposals are not yet final, the precise reserve composition, capital levels, and custody standards are among the details that could still shift during the comment process.

Fed Governor Michael Barr said the proposed framework should provide strong safeguards while supporting stablecoins as payment instruments. He also raised concerns about how anti-money-laundering oversight will operate under the final rules.

The proposals remain subject to public feedback, leaving details open to potential changes before the Fed adopts final regulations. Watch points from here include the Federal Register publication that starts the 60-day clock, the feedback the Fed receives during the comment period, and how the final rules address the anti-money-laundering oversight questions Barr flagged.

Source: CryptoMeter io