Fed drafts stablecoin reserve rules, blocks direct holder yield
DeFi & Yields ·
The Federal Reserve released proposed regulations for payment stablecoin issuers it oversees, setting reserve backing requirements and cutting off yield paid directly to token holders under the GENIUS Act.
Under the draft, issuers supervised by the central bank would need to keep stablecoins fully backed by permitted assets, including short-term Treasuries, according to decrypt.co. The proposal also bars paying interest or rewards simply for holding a stablecoin, and it restricts certain arrangements where third parties might otherwise pass that yield along to users. In practice, the issuer collects interest on the Treasuries backing the token, while whoever holds the dollar-pegged coin does not receive any of that return directly.
The rulemaking is part of a broader regulatory push tied to the GENIUS Act. Separate elements of the framework touch on capital requirements, liquidity standards, and risk-management expectations for issuers, along with reserve limits and an application process specifically for bank-issued tokens, as outlined by theblock.co. The Fed has also flagged money laundering risk as a factor shaping the standards it wants supervised issuers to meet.
The proposals are being released for public comment, with two GENIUS Act-related measures opened for feedback covering regulated issuance by supervised banks, per wublockchain.xyz. The comment window runs 60 days from the date the rules are published in the Federal Register, giving industry participants and other stakeholders a defined period to respond before any framework is finalized.
Coverage of the draft rules has been corroborated across multiple outlets, with ten distinct sources tracking the story, including detailed breakdowns of the reserve and capital components at leviathan.news. What remains unresolved is how the Fed will handle public comments during the 60-day window, whether the yield restrictions or third-party reward limits will be narrowed or expanded in a final rule, and how the bank application process for issuing tokens will be structured once the framework moves past the proposal stage.