Investing.com – The Federal Reserve released comprehensive regulatory proposals for stablecoin issuers on Thursday, marking a significant step in the efforts of U.S. financial regulators to integrate digital assets into the formal banking system. This move represents major progress in implementing the “Guidance for Innovation and Establishment of National Standards for Stablecoins in the U.S.” (widely known as the GENIUS Act), which was enacted last year.
Under the primary proposal, stablecoin issuers regulated by the Federal Reserve would be required to fully back their payment-focused stablecoins with high-quality, liquid assets—primarily short-term U.S. Treasury securities. The framework also introduces standardized capital requirements to mitigate operational and credit risks, while prohibiting issuers from offering yields or interest to users simply for holding the digital tokens.
A second proposal establishes a tailored application process for insured state-member banks, allowing them to seek approval to form subsidiaries for the issuance of payment-focused stablecoins. Applicants must submit detailed business plans, financial records, background information on personnel, relevant risk management policies, and documentation regarding their proposed capital structure.
These actions by the Federal Reserve are being coordinated with similar regulatory efforts by other agencies, including the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). The initiatives aim to establish rigorous operational standards well ahead of the statutory deadline mandated by the GENIUS Act—no later than January 2027.
Despite this regulatory progress, senior officials have noted that several key areas require further refinement before final rules are issued. Federal Reserve Vice Chair for Supervision Michael S. Barr emphasized that stablecoins must remain redeemable at par value, even during periods of market stress. He also expressed caution regarding potential limitations on the ability of banks to enforce anti-money laundering (AML) compliance.
Both proposals will be open for a 60-day public comment period following their publication in the Federal Register. Investors and digital asset service providers are expected to monitor this feedback window closely, as the final ruling will determine the compliance standards and operational costs for institutional participation in the stablecoin sector.