The Federal Reserve has introduced a proposal establishing specific capital, redemption, and disclosure requirements for stablecoin issuers under its supervision, marking a key step in implementing the GENIUS Act. While the legislation already mandates one-to-one reserve backing using cash, bank deposits, or short-term US Treasurys, the new rules define detailed operational-risk capital charges. These charges are structured as 2% of the first $20 billion in outstanding stablecoins, 1.5% of the next $30 billion, and 1% of amounts exceeding $50 billion, alongside additional requirements for credit and operational risks.
Under the framework, issuers must generally process redemptions within two business days. If reserves fall below the required one-to-one ratio, issuers must notify the Fed and either restore reserves via a remediation plan or liquidate assets to redeem outstanding tokens. The proposal also requires monthly public reports on stablecoin issuance and reserve composition, certified by the issuer’s CEO and CFO and examined by a registered accounting firm. A separate component outlines an application process for Fed-supervised banks seeking approval to issue payment stablecoins through subsidiaries. The proposals remain open for public comment for 60 days after publication in the Federal Register, with the GENIUS Act set to take effect on Jan. 18, 2027, or 120 days after final rules are issued.
The introduction of tiered capital charges signals a shift from treating stablecoins merely as payment instruments to regulating them with prudential standards akin to traditional financial institutions. By imposing higher capital buffers on smaller issuance volumes and tapering requirements for larger balances, the Fed aims to balance systemic stability with scalability. The strict two-day redemption timeline and mandatory monthly audits address critical transparency gaps that have historically plagued the sector, potentially reducing information asymmetry for institutional participants who require verifiable proof of reserves before engaging at scale.
