Federal Reserve Seeks Public Comments on Stablecoin Issuance Regulatory Framework Under the GENIUS Act

The U.S. Federal Reserve Board announced on September 24 that it is seeking public comment on two proposals to establish a regulatory framework for payment stablecoin issuers under its oversight, pursuant to the GENIUS Act. The first proposal mandates that issuers back stablecoins with full reserves of approved high-quality liquid assets such as short-term U.S. Treasury securities, and sets standardized capital requirements and risk management standards to mitigate credit and operational risks associated with stablecoin operations. It also proposes to set rules for Federal Reserve-supervised institutions holding stablecoin reserve assets, and clarify the permissible scope of activities for regulated banks engaging in stablecoin and related operations. The second proposal aims to establish a dedicated application process for Federal Reserve-supervised banks seeking to issue payment stablecoins, requiring applicants to submit documents including business plans and financial information, while establishing procedures for application appeals, hearings, and final rulings. The public comment period will conclude 60 days after the proposals are published in the Federal Register.