Federal Reserve Proposes New Capital and Redemption Rules for Stablecoin Issuers

The Federal Reserve has proposed new regulatory requirements for stablecoin issuers to support the implementation of the GENIUS Act. The proposal introduces a tiered capital charge mechanism, requiring 2% for the first $20 billion in reserves, 1.5% for the next $30 billion, and 1% for amounts exceeding that, alongside additional credit risk requirements. Issuers must process redemption requests within two business days and notify the Federal Reserve immediately if reserve ratios fall below 1:1. Furthermore, issuers are mandated to publish monthly audited reserve reports signed by executives. Federal Reserve Governor Michael Barr emphasized the necessity of maintaining stablecoin liquidity under market stress and called for public feedback on the framework's adequacy regarding interest and exchange rate risks.