The Federal Reserve has initiated a public comment period for two proposed rule sets concerning the implementation of the GENIUS Act. These regulations target issuers of payment stablecoins under the Fed's supervision, establishing strict requirements for capital, reserves, and operational procedures.
The first proposal mandates full backing of stablecoins with high-quality liquid assets, such as short-term US Treasury bills. Issuers must fulfill redemption requests within two business days and provide monthly audited reports on reserve composition. If reserves fall below a 1:1 ratio, the issuer must notify the Fed and submit a recovery plan or begin liquidation.
The second proposal outlines the application process for Fed-supervised banks intending to issue stablecoins through subsidiaries. This includes submitting comprehensive business plans and financial data. Michael Barr, a member of the Board of Governors, supported the initiative while emphasizing the need to address interest rate risks and redemption rights.
Public comments on these proposals will be accepted for 60 days following their publication in the Federal Register. The GENIUS Act, signed by President Donald Trump on July 18, 2025, is scheduled to take effect on January 18, 2027, or 120 days after the final rules are issued, whichever comes first.
