Fed wants issuers to back stablecoins with assets, tailored process for banks mulling token issuance

The Federal Reserve Board introduced two proposals related to regulations for supervised payment stablecoin issuers under the GENIUS Act.Firstly, the board wants payment stablecoin issuers to fully back their tokens with permissible reserve assets, such as short-term Treasury bills and other high-quality liquid assets.The proposal establishes standardized capital requirements to address credit and operational risks as well as risk management standards.Additionally, the proposal aims to introduce rules for firms that safekeep assets backing payment stablecoins.Secondly, the board aims to establish a tailored application process for banks applying to issue payment stablecoins.Banks are expected to submit a business plan and financial information, among other documents. The proposal would also create a process governing appeals, hearings, and final determinations for applications.The board is requesting public comments on the two proposals within 60 days after publication of the proposals in the Federal Register.Major stablecoins and their issuers in the U.S. include Circle Internet , Tether (), Paxos , and PayPal ().Furthermore, the news impacts banks mulling issuance of stablecoins, such as the group of 21 international financial institutions set a new stablecoin company and the financial institutions working on the Open USD stablecoin.Content provided by Seeking Alpha is intended for information purposes only, and that Seeking Alpha does not offer any personalist investment advice and is not a licensed securities dealer, broker, US investment adviser or investment bank.