Fed Proposes Stablecoin Capital Rules, 2-Day Redemption Window Under GENIUS Act

The Federal Reserve has unveiled proposed capital, redemption, and reserve disclosure requirements for stablecoin issuers under its supervision, advancing the implementation of the GENIUS Act. The framework introduces tiered operational-risk capital charges—2% on the first $20 billion in outstanding stablecoins, 1.5% on the next $30 billion, and 1% on amounts exceeding $50 billion—with additional capital requirements tied to credit and operational risks. The proposal is open for public comment for 60 days following publication in the Federal Register.

Under the proposed rules, issuers would be obligated to process redemptions within two business days. If reserves fall below the required one-to-one backing, issuers must notify the Fed and either restore reserves through a remediation plan or liquidate and redeem outstanding tokens. The GENIUS Act already mandates that stablecoins be backed one-to-one by cash, bank deposits, or short-term US Treasuries, and the Fed's proposal layers on monthly disclosure requirements. Issuers would need to publish reports detailing outstanding stablecoins and the composition of their reserves, with each report examined by a registered public accounting firm and certified by the issuer's CEO and CFO.

A companion proposal outlines an application process for Fed-supervised banks seeking approval to issue payment stablecoins through subsidiaries, requiring applicants to provide detailed business plans and financial information. Fed Governor Michael Barr supported the proposal but emphasized that further regulatory work is needed to ensure stablecoins function as reliable payment instruments. "Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions," Barr said, noting that redemption reliability must hold even during market stress or episodes of strain on individual issuers. He encouraged public feedback on whether the framework adequately addresses interest-rate and foreign-exchange risks.