Overview
- The Federal Reserve on Thursday published two GENIUS Act proposals that would require Fed‑supervised payment stablecoin issuers to fully back tokens with permitted liquid assets and meet standardized capital and risk‑management standards.
- One proposal would set rules for safekeeping reserves and would treat many third‑party yield or reward arrangements as likely prohibited payments of interest, aligning Fed guidance with the OCC’s approach.
- The second proposal would create a tailored application process for Fed‑supervised banks that want to issue payment stablecoins and set timelines and documentation requirements for those applications.
- Bloomberg reported that the administration is considering a separate, unannounced plan to promote dollar‑backed stablecoins overseas through possible joint ventures with private firms and agencies such as Treasury, State and the DFC, a move intended to increase foreign use of dollars and demand for U.S. Treasuries.
- Stablecoin issuers already hold large short‑term Treasury positions (reported near $200 billion), so broader overseas adoption would boost front‑end Treasury demand but could concentrate risk because a run on major issuers might force rapid liquidation of those holdings.