The Federal Reserve on September 24 requested public comment on two proposals to implement the GENIUS Act for Board-supervised payment stablecoin issuers. The proposals would translate the law’s mandate into reserve, capital, redemption and bank-approval requirements, while opening a comment period that will run for 60 days after publication in the Federal Register.
Permissible reserves and the two-day redemption standard
Under the Fed’s principal proposal, payment stablecoins would need one-to-one backing by permissible reserve assets. The eligible categories include U.S. dollars, balances held at the Federal Reserve, insured deposits, U.S. Treasuries maturing within 93 days and certain Treasury-backed repurchase agreements, according to the Board’s staff memorandum.
The framework would also require issuers to publish redemption policies providing for redemption within no more than two business days, subject to specified exceptions. It would establish requirements for reserve custodians and address stablecoin-related activities by Fed-supervised banks, Reuters reported.
Capital charges target uninsured deposits, reverse repos and operational risk
The proposal goes beyond asset backing by adding loss-absorption requirements for specified risks. It would apply capital requirements to credit risk associated with uninsured deposits and undercollateralized reverse repurchase agreements, as well as to operational risk.
The proposed credit-risk capital charge is 2%. The operational-risk charge would range from 1% to 2% of outstanding stablecoins, depending on the issuer’s size, the Fed memorandum said. Those charges would sit alongside the proposed reserve standards rather than replace them.
State member banks would need approval for stablecoin-issuing subsidiaries
The second proposal would create a tailored Federal Reserve application process for insured state member banks seeking approval to establish subsidiaries that issue payment stablecoins.
Applicants would need to submit a business plan, financial information, capital-structure documentation and related certifications, according to a separate Federal Reserve Board staff memorandum.
The application process would address the bank subsidiary arrangement separately from the prudential standards applicable to a stablecoin issuer, rather than treating issuer rules as automatic permission for the structure.
Federal Register publication starts the 60-day comment clock
The Fed has requested public input on both proposals; the agency said the comment period will close 60 days after the notices are published in the Federal Register. The September 24 announcement did not specify a calendar closing date because it is tied to that publication date.
The Federal Reserve Board’s announcement frames the two proposals as implementing measures for Board-supervised payment stablecoin issuers under the GENIUS Act.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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