The Fed has proposed new rules for the companies behind stablecoins, and they want those companies to hold more capital, answer faster when customers want their money back, and explain themselves to outside auditors each month. The move follows passage of the GENIUS Act, which already requires stablecoin issuers to keep one dollar in cash, bank deposits or short-term US Treasurys behind every token they put out.
The proposal adds an operational-risk capital charge on top of that mandate. Issuers would pay 2% of the first $20 billion in stablecoins, 1.5% of the next $30 billion, and 1% of anything above $50 billion. There are also credit and operational risk charges layered on top.
The capital charge breakdown
The operational-risk capital charge works like this:
- 2% of the first $20 billion in stablecoins
- 1.5% of the next $30 billion
- 1% of anything above $50 billion
There are also credit and operational risk charges layered on top of that base.
Redemption deadlines and reserve warnings
Under the proposal, issuers must process redemptions within two business days. If the reserve backing falls below one-to-one, the issuer must notify the Fed and either restore the reserves or liquidate them.
Monthly reports on outstanding stablecoins and the value and composition of reserves must be examined by a registered public accounting firm. The issuer’s CEO and CFO must certify the reports.
A separate proposal covers Fed-supervised banks that want to issue payment stablecoins through subsidiaries. Those banks would need to submit a business plan and financial information.
Public comment on the proposals runs for 60 days after publication in the Federal Register. The GENIUS Act takes effect Jan. 18, 2027, or 120 days after final implementing rules, whichever comes first.
Barr’s push for clearer limits
Fed Governor Michael Barr backed the proposal but said further work is needed for stablecoins to become reliable payment instruments. He said stablecoins must remain redeemable at par during market stress, including episodes of strain on the issuer or its related entities.
Barr encouraged the proposed limits on reserve assets and standardized capital requirements. He called for public feedback on interest-rate and foreign-currency risks.
He also raised concerns about an anti-money laundering standard that would bar the Fed from taking supervisory or enforcement action unless the issue is “significant or systemic.” That standard appears in the proposal, and Barr’s objection to it is part of the record.
Barr said universal redemption rights should be clearly established in the final rule.
Stablecoins must remain redeemable at par during market stress, including episodes of strain on the issuer or its related entities.
What the proposal means for issuers
The practical effect is that stablecoin issuers will need to plan for higher capital costs, faster response times on redemptions, and more frequent reporting. The two-business-day redemption deadline is a hard floor, and the reserve-liquidity requirements mean issuers cannot let their backing slip below one-to-one for long.
The monthly audit requirement adds a layer of scrutiny that did not exist before. CEOs and CFOs will have to sign off on reports that have been examined by a registered public accounting firm.
The Fed-supervised banks proposal adds another layer of complexity for institutions that want to enter the space through a subsidiary. They will need to lay out their plans in advance, which could slow launches.
The GENIUS Act already mandated one-to-one reserves backing stablecoins, limited to cash, bank deposits and short-term US Treasurys. The Fed’s proposal extends that framework with capital charges, redemption deadlines and reporting requirements.
The public comment period gives interested parties a chance to weigh in before the rules are finalized. After that, the effective date of Jan. 18, 2027, or 120 days after final rules, whichever comes first, will lock the framework in.
The proposal is a significant step toward regulating a market that has grown rapidly in recent years. Whether it achieves its stated goal of making stablecoins reliable payment instruments remains an open question.
Where the paper stands
The paper backs the small stablecoin issuer against the Fed and is against the new capital-charge rulebook, which the big issuers helped write. Regulation usually protects the biggest players and raises the cost of entry for small ones, and this proposal fits that pattern: the operational-risk capital charge hits issuers holding over $20 billion at 2%, 1.5%, and 1% rates, with credit and operational risk charges layered on top. The GENIUS Act already mandates one-to-one reserves backing, limited to cash, bank deposits and short-term Treasurys, and the Fed now proposes to build a whole new rulebook on top of it.
What the paper wants instead is narrow oversight aimed only at the harm, not a broad new set of commands written with the help of the very firms the rules are supposed to oversee. The public comment period offers a chance to weigh in, but the paper’s position on regulation holds: it favors the small business against both the agency and the giant.
Source material: “Fed proposes new capital, redemption rules for stablecoin issuers,” Cointelegraph.
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