Federal Reserve Proposes Reserve and Capital Requirements for Bank-Issued Stablecoins

The U.S. Federal Reserve has proposed new regulations for bank-issued payment stablecoins, requiring a 1:1 reserve ratio for every dollar-pegged token. Issuers must ensure customer redemptions are typically completed within two business days. Eligible reserve assets include cash, Fed balances, specific bank deposits, U.S. Treasuries with maturities under 93 days, and qualified repurchase agreements. The proposal also introduces standardized capital requirements, with a 2% capital charge for the first $20 billion in stablecoin issuance and 1% for amounts exceeding $50 billion. Additionally, the proposal outlines a process for state member banks to establish subsidiaries for stablecoin issuance, with the GENIUS Act mandating a 120-day decision window for the Fed. Fed Vice Chair for Supervision Michael Barr emphasized the need for reliable, par-value redemptions across all market conditions. Public comments will be accepted for 60 days following publication in the Federal Register.