Federal Reserve Proposes Strict Capital and Reserve Rules for Payment Stablecoins
CIE News ·
The Federal Reserve Board has officially released two notices of proposed rulemaking establishing a comprehensive supervisory framework for payment stablecoin issuers under the GENIUS Act. The regulatory package introduces binding capital and liquidity mandates, led by a requirement for issuers to maintain 100% liquid asset reserve backing at all times. In addition, the central bank’s framework institutes a tiered operational-risk capital charge and mandates that all issuers process par redemptions within two business days, marking a direct effort to standardize stability and settlement mechanisms across the digital currency sector ahead of the statutory enforcement deadline set for January 2027.
The rulemaking outlines specific structural restrictions on stablecoin architecture and operations, most notably enacting a strict prohibition on paying yield simply for holding tokens. Alongside liquidity constraints, the proposals delineate formal application procedures that bank subsidiaries must follow to issue payment stablecoins lawfully. By establishing a tiered operational-risk capital schedule and enforcing full backing by liquid assets, the Federal Reserve targets run risk and operational failure points, mandating that redemption mechanisms execute at par without operational delay beyond the specified two-day business window.
Following publication of the twin notices, the Federal Reserve has opened a 60-day public comment period for industry participants, banking organizations, and public stakeholders to provide formal input on the implementation details. The regulatory proceedings establish an official implementation roadmap leading into the January 2027 enforcement benchmark, ensuring that both bank subsidiaries and broader payment stablecoin issuers face clearly codified standards for capital, reserves, token functionality, and federal application compliance.