The Federal Reserve proposed two rules related to establishing a regulatory framework for payment stablecoin issuers under the GENIUS Act.
Backing: The first proposal would:
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Require that payment stablecoin issuers fully back their stablecoins with reserve assets such as short-term Treasury bills and other high-quality, liquid assets.
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Establish standardized capital requirements to address certain credit and operational risks of payment stablecoin activities, as well as risk management standards.
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Introduce rules for firms that safekeep the assets backing payment stablecoins.
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Clarify the permissibility of stablecoin and related activities for Board-supervised banks.
Applicants: The Fed’s second proposal would:
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Establish a tailored application process for banks applying to issue payment stablecoins.
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Create a process governing appeals, hearings, and final determinations for applications.
Input: The comment period will close 60 days after publication in the Federal Register.
ICBA Advocacy: In response to earlier proposals by the OCC and FDIC, ICBA advocated for a strict interpretation of the GENIUS Act's prohibition on the payment of yield or interest by issuers and called on regulators to consider the potential impacts of payment stablecoin growth on community bank deposits and lending.
ICBA Comments: In its previous comments, ICBA:
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Called on the FDIC to adopt a strict payment stablecoin framework.
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Urged the OCC to strengthen its proposed GENIUS Act rules to protect against stablecoin risks.