Fed stablecoin proposal makes circulation a capital cost for supervised issuers

The Federal Reserve’s recent supervisory proposal would require payment stablecoin issuers under its oversight to hold capital proportional to the amount of coins they circulate, even if the issuers generate no revenue beyond their reserve assets.

Baseline operational‑risk charge

For a hypothetical issuer with $1 billion of stablecoins in circulation and no non‑reserve revenue, the baseline operational‑risk capital charge would be $20 million. The charge scales with the volume of stablecoins:

• 2 % of the first $20 billion of outstanding stablecoins
• 1.5 % of the next $30 billion (up to $50 billion total)
• 1 % of any amount above $50 billion

These rates apply only to the incremental amount that crosses each threshold.

Additional adjustments

The Fed also proposes adding 25 % of an issuer’s three‑year average annual revenue from non‑reserve assets to the baseline figure. A loss‑scalar adjustment could further increase or decrease the operational‑risk charge based on realized losses. Other capital components may apply, but the baseline charge is the core element of the proposal.

Reserve‑asset requirements

Issuers would still need to hold eligible reserve assets with a fair‑value equal to the par value of all outstanding stablecoins. A separate 2 % capital charge is proposed for reserve assets that are uninsured deposit claims or under‑collateralized reverse repurchase agreements, distinct from the operational‑risk charge.

Scope of supervision

The formula targets approved stablecoin‑issuing subsidiaries of insured state member banks and certain state‑chartered issuers that transition to Fed supervision under the GENIUS Act. The OCC’s parallel proposal uses a different approach, setting a minimum capital floor (generally $5 million) and requiring a liquid‑asset backstop equal to 12 months of expenses.

Regulatory timeline

The Fed released its proposal on September 24 and will accept comments for 60 days after Federal Register publication. The OCC’s rule was published on March 2, with comments closing on May 1. Both frameworks remain subject to revision through rulemaking.