The Federal Reserve today proposed new rules to require payment stablecoin issuers under its supervision to back their stablecoins with certain reserve assets, and to establish an application process for state member banks seeking to create subsidiaries that issue the digital asset.
The two rules would implement the Genius Act, which was passed by Congress last year. The FDIC and Office of the Comptroller of the Currency have previously proposed their own implementation rules for financial institutions under their supervision.
The first rule would establish requirements to ensure “that payment stablecoins are fully backed at all times by permissible reserve assets,” according to a Fed board memo. It would establish capital requirements and risk management standards for issuers.
The second rule would require state member banks to submit a business plan and financial information as part of their applications, according to a memo. It would also create a process governing appeals, hearings and final determinations for applications.
The comment period for the proposed rules will close 60 days after publication in the Federal Register.
