Federal Reserve seeks public input on two stablecoin proposals under GENIUS Act

• The Federal Reserve is seeking public input on two proposals covering stablecoin reserves, capital requirements, risk management and issuer approval procedures.
• Governor Michael Barr stressed that stablecoins must support reliable, prompt redemptions at par across a range of market conditions.
• The Fed’s proposals follow the Senate’s 49-50 failure to advance the CLARITY Act last week.

The Federal Reserve (Fed) Board is seeking public comment on two proposals that would establish a regulatory framework for payment stablecoin issuers supervised by the central bank under the GENIUS Act.

Fed opens public comments on proposed stablecoin requirements

The proposals, announced Thursday, would establish requirements covering stablecoin reserves, capital, risk management and the approval process for banks seeking to issue payment stablecoins. The comment period will close 60 days after the proposals are published in the Federal Register.

The first proposal would require Board-supervised payment stablecoin issuers to fully back their tokens with permitted reserve assets, including short-term Treasury bills and other high-quality, liquid assets.

It would also introduce standardized capital requirements to address credit and operational risks associated with stablecoin activities, alongside risk-management standards.

The second proposal focuses on the approval process for Board-supervised banks seeking authorization to issue payment stablecoins through subsidiaries. Applicants would be required to submit business plans, financial information and other documentation, while the proposed framework would establish procedures for appeals, hearings and final application decisions.

Fed governor calls for stronger stablecoin protections

Federal Reserve Governor Michael Barr said the proposed framework is intended to provide safeguards while allowing stablecoins to develop as payment instruments.

“The regulatory framework for stablecoins needs to provide strong guardrails and consumer protections so that new instruments can foster payments improvements that benefit households and businesses,” Barr said in a Thursday statement.

Barr also emphasized that stablecoin issuers must honor redemption requests even during periods of market stress.

“Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions,” he stated, adding that stress could affect the value of otherwise liquid government debt or place pressure on an individual issuer and its related entities.

The governor said he was encouraged by the proposed limits on reserve assets and standardized capital requirements. He called for public feedback on whether the framework sufficiently addresses interest-rate and foreign-currency risks.

He also highlighted the importance of clear universal redemption rights to maintain public confidence in access to stablecoin funds.

The Federal Reserve's move comes as Congress remains divided over broader cryptocurrency market legislation. Last week, the Senate rejected a motion to invoke cloture on the CLARITY Act by a 49-50 vote, far below the 60-vote threshold.

The failure to advance the CLARITY Act leaves the GENIUS Act as the principal federal legislation underpinning the current stablecoin rulemaking process.