Federal Reserve Proposes Supervisory Rules for Payment Stablecoins
CIE News ·
The United States Federal Reserve has formally introduced a comprehensive regulatory framework targeting stablecoin issuers and custodians operating under its supervisory authority. Designed to integrate payment stablecoins into traditional banking oversight, the proposal mandates that covered entities maintain a full 1:1 liquid asset backing for all issued stablecoins alongside adherence to regular reporting requirements. The initiative marks an expansion of federal oversight aimed at mitigating systemic risks, preventing reserve mismatches, and ensuring the operational resilience of digital assets within the banking ecosystem.
Under the proposed technical standards, reserve backing is strictly limited to high-quality assets, specifically short-term U.S. Treasuries or central bank deposits. The framework establishes volume-linked capital charges that mandate issuers hold higher capital buffers as their circulating supply expands, while also establishing a structured formal approval process for banking institutions seeking to issue payment stablecoins. To address liquidity runs and safeguard redemptions, the rules outline standardized run-risk procedures and require issuers to execute customer redemptions within two business days without imposing liquidation fees.
Currently positioned as a formal supervisory proposal, the framework prioritizes solvency, consumer protection, and systemic risk mitigation for entities handling payment stablecoins. Regulated banking institutions and custodians are reviewing the technical mandates as the central bank evaluates how to integrate these capital charges and issuance requirements into its existing supervisory structure. Federal Reserve officials are slated to review industry feedback as they prepare for the subsequent phase of the regulatory implementation process.