Federal Reserve Proposes New Rules for GENIUS Act Stablecoin Issuance

The U.S. Federal Reserve has released two draft proposals under the GENIUS Act, mandating that stablecoin issuers maintain full asset backing and adhere to standardized capital requirements. The first proposal requires reserves to be held in high-quality, liquid assets like U.S. Treasury bills, while the second establishes a formal application and oversight process for banks looking to issue stablecoins. These proposals, which follow a one-year delay in implementation, are now open for a 60-day public comment period. The framework aims to integrate traditional banking standards into the stablecoin sector, potentially reshaping the market landscape by increasing operational costs and enabling traditional financial institutions to enter the space.