Fed requests comment on stablecoin reserve, capital and licensing rules

The Federal Reserve Board on Thursday requested public comment on two proposed rules that would build out its supervisory framework for banks issuing payment stablecoins under the GENIUS Act. The proposals set reserve, capital and custody standards for Board-supervised issuers and lay out a formal application process for banks that want to issue stablecoins.

• First proposal requires full backing of stablecoins with Treasury bills and other liquid reserve assets
• Second proposal creates an application process requiring a business plan and financial disclosures
• Comment period closes 60 days after the notices are published in the Federal Register

The Federal Reserve Board requested public comment on two proposals for establishing its regulatory framework for Board-supervised payment stablecoin issuers, according to the release issued Thursday. The proposals implement the Board’s responsibilities under the GENIUS Act, the federal stablecoin law that assigns bank supervisors, including the Fed, oversight of payment stablecoin issuance by insured depository institutions.

Reserve and capital standards for issuers

The first proposal “would require that Board-supervised payment stablecoin issuers fully back their stablecoins with certain permissible reserve assets, such as short-term Treasury bills and certain other high-quality, liquid assets,” according to the release.

It also directs the Board to set standardized capital requirements addressing credit and operational risk from stablecoin activities, along with risk management standards. The proposal separately introduces rules for Board-supervised firms that custody the assets backing stablecoins and clarifies what stablecoin-related activities are permissible for Board-supervised banks to conduct.

A licensing path for bank issuers

The second proposal establishes what the release calls “a tailored application process for Board-supervised banks applying to issue payment stablecoins.” Applicants would have to submit a business plan and financial information among other required documents.

The proposal also creates procedures governing appeals, hearings and final determinations on those applications, giving banks and the Board a defined process for resolving denied or contested filings.

What the release does not specify

The release does not state the actual capital ratios, reserve composition limits or custody thresholds the Board intends to apply, leaving those to the underlying Federal Register notices. It also does not give the publication date for either notice in the Federal Register, so the 60-day comment window has no fixed closing date yet.

The document is silent on how this framework will interact with state-chartered or non-bank stablecoin issuers regulated by other agencies under the GENIUS Act, and it does not disclose which banks, if any, have already signaled intent to apply.

Analysis: A compliance gate before banks can issue

For banks weighing whether to launch a stablecoin, this is the first time the Board has spelled out concrete prerequisites: full reserve backing in Treasury bills and similar liquid assets, standardized capital charges and a formal application with business-plan disclosure. That converts stablecoin issuance from a strategic option into a supervised product line with its own approval, appeal and hearing process, closer to how the Fed treats new bank activities generally than to the lighter-touch state trust charters some issuers currently use.

Custodians that safekeep reserve assets face new direct rules rather than indirect exposure through a bank client’s balance sheet, which raises the compliance bar for any Board-supervised firm in that business. Existing non-bank issuers are not addressed here, so the near-term effect falls on banks and their prospective custodians, not on the largest current stablecoin issuers, which sit outside Board supervision.

The comment period will close 60 days after publication in the Federal Register.

Federal Reserve Board, release

The BlockWest read. The Fed is building a bank-style licensing lane for stablecoins rather than adapting existing charters, which will likely make bank-issued stablecoins slower to market than non-bank alternatives already operating under state or other federal oversight. Watch which banks file first once the application process is final.

The two notices, covering reserve and capital standards and the bank application process, must still be published in the Federal Register before the 60-day comment clock starts running.

BlockWest is a news publication. Nothing here is investment advice. Read our disclaimer and editorial policy.