Federal Reserve unveils proposed framework for stablecoin issuers

Investing.com -- The Federal Reserve on Thursday unveiled comprehensive regulatory proposals for stablecoin issuers, advancing efforts by U.S. financial watchdogs to integrate digital assets into the formal banking system. The measures mark a significant step toward implementing the landmark Guiding and Establishing National Innovation for U.S. Stablecoins Act, widely known as the GENIUS Act, which passed last year.

A secondary proposal outlines a tailored application process for insured state member banks seeking approval for subsidiaries to issue payment stablecoins. To obtain authorization, lenders must submit detailed business plans, financial records, biographical reports, and relevant risk-management policies, alongside documentation of their proposed capital structures.

The Fed's actions coincide with coordinated rulemakings from peer regulators, including the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. Together, these measures aim to enforce strict operational standards ahead of the GENIUS Act’s statutory enforcement deadline, which takes effect no later than January 2027.

Despite the regulatory progress, senior officials highlighted key areas requiring further refinement before final rules are adopted. Federal Reserve Governor Michael S. Barr emphasized that stablecoins must remain redeemable at par during period of market strain, while raising caution over potential limitations on enforcement capabilities regarding bank anti-money laundering deficiencies.

Both proposals will be open for public comment for 60 days following publication in the Federal Register. Investors and digital asset service providers are expected to closely monitor the feedback window, as final determinations will dictate the compliance standards and operational costs for institutional participation in the evolving stablecoin sector.

Original Article

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