Fed Proposes New Reserve Requirements for Payment Stablecoins: Which Assets Qualify?

The Federal Reserve proposed reserve, capital, and risk management rules for payment stablecoins under the GENIUS Act.

In a proposal issued Thursday, the Fed said issuers must fully back their stablecoins with short-term U.S. Treasury bills or other highly liquid assets. The proposal introduces new requirements for how reserves must be established.

The proposal also calls for standard capital requirements and risk management rules for issuers. It also proposes a special process through which banks under Fed supervision can apply to issue stablecoins.

Implementation step for the GENIUS Act

The GENIUS Act, signed by U.S. President Donald Trump last year, requires stablecoins to be fully backed by dollars or similarly liquid assets and to undergo annual audits. The law will take effect in January 2027. The Fed’s proposal is one of the regulations being prepared to implement the law.

Fed Governor Michael Barr said he supports the proposal but called for more rules regarding banks’ anti-money laundering obligations. Barr said he was concerned about a standard that would limit supervisory or enforcement action in this area to only “significant or systemic” issues, given existing shortcomings.

According to Barr, this threshold could affect the Fed’s ability to verify that banks establish and maintain compliant programs.