Fed proposes reserve and redemption rules for bank payment stablecoins

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【Fed proposes requiring banks to provide each 1 USD token with at least 1 USD in reserves】

The Federal Reserve (Fed) plans to establish rules for payment stablecoins issued by banks, requiring each 1 USD token to be backed by at least 1 USD in approved reserve assets and generally allowing customers to complete redemptions within two business days. Issuers that remain below minimum capital requirements may be required to liquidate reserve assets and redeem all tokens. Reserve assets may include USD, Federal Reserve bank balances, certain bank deposits, U.S. Treasury securities with no more than 93 days to maturity, eligible repurchase agreements, and qualifying investment funds; tokenized forms of some assets may also be included. If reserves are insufficient, the issuer must notify the Fed and restore full backing; otherwise, it must liquidate the reserves and redeem the tokens linked to USD. The Fed plans to require issuers to hold standardized capital against operational and certain credit risks. For the first 20000000000 USD of issued stablecoins, the capital charge is 2%, while the charge for the portion above 50000000000 USD is 1%. Another proposal would allow insured depository state member banks to apply to establish subsidiaries that issue payment stablecoins. The 《GENIUS Act》 stipulates that, once an application is substantially complete, the Fed must make a decision within 120 days. Fed Governor Michael Barr said stablecoins should be reliably and promptly redeemable at par across a range of market conditions and when issuers encounter problems, and called for the final rule to clearly establish a general redemption right. He also expressed concern about the threshold requiring anti-money-laundering deficiencies to be “material or systemic” before regulatory or enforcement action is triggered. The public comment period will be 60 days after publication in the Federal Register.

Key points

The Fed proposes establishing rules for payment stablecoins issued by banks.
The rule would require each 1 USD token to be backed by at least 1 USD in approved reserve assets.
Customer redemptions would generally need to be completed within two business days.
The public comment period is after publication in the Federal Register 60 days.

AI-assisted interpretation

The following is analysis, separate from reported facts. Verify important claims independently.

This means that payment stablecoins issued by the relevant banks would be required to be backed by sufficient eligible assets and redeemed promptly at par upon customer request. This remains a proposed rule, not a final rule.

Why it matters to readers

The rule may affect reserve management, capital requirements, and redemption arrangements when banks issue payment stablecoins.

Stablecoins can be understood as tokens intended to maintain a fixed value relative to USD; the focus here is that issuers need to prepare sufficient asset backing for the tokens and meet redemption requirements.

Risks and unknowns

The materials do not include the original Federal Reserve announcement or Federal Register text.
It remains uncertain whether the final rule will adjust the scope of reserve assets, capital charges, redemption time limits, and mechanisms for handling insufficient reserves.
The materials do not state whether the rule has been formally issued or taken effect.

Fed proposes reserve and redemption rules for bank payment stablecoins

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