The Federal Reserve has released two proposals aimed at establishing formal guardrails for stablecoin issuers under its supervision, laying out requirements for how tokens must be backed and creating a pathway for banks that want to enter the market.
What the Fed Is Proposing
The central bank opened both proposals for public comment as it moves to implement the GENIUS Act, the recently passed federal framework governing dollar-pegged digital tokens. Under the plans, issuers overseen by the Fed would be required to fully back their stablecoins with safe, liquid assets, ensuring that every token in circulation is matched by reliable reserves.
The measures are designed to reduce the risk that a stablecoin could lose its peg or leave holders unable to redeem their tokens for the promised value. By mandating full backing with high-quality assets, regulators are seeking to prevent the kind of runs that have destabilized less transparent projects in the past.
Every token in circulation must be matched by safe, liquid assets under the Fed's proposed rules.
A Path for Banks
A second proposal establishes an application process for banks that wish to issue stablecoins, giving traditional financial institutions a defined route into the space. The framework would let supervised lenders participate while remaining subject to capital and reserve standards.
The two proposals reflect the Fed's effort to translate the GENIUS Act's statutory requirements into workable supervisory rules. Key elements under consideration include:
- Full reserve backing with safe assets for supervised issuers
- Capital standards for banks entering the stablecoin business
- A formal application and approval process for prospective issuers
By opening both proposals for comment, the Fed is inviting feedback from industry participants, banks, and the public before finalizing the rules. The outcome could shape how deeply established financial institutions engage with a market that has largely been dominated by crypto-native firms.