Fed stablecoin plan would make circulation a direct capital cost
The Federal Reserve's proposed capital framework would make the size of a payment stablecoin's circulation a direct cost for issuers it supervises. Under the proposal announced on Sept. 24, a hypothetical issuer with $1 billion in coins outstanding and no revenue from activities outside its reserve assets would start with a $20 million baseline operational-risk capital charge, before a loss-history adjustment and any other applicable capital charges are applied, according to the Board's memo.
For the first $20 billion of payment stablecoins outstanding, the Fed would calculate the issuance portion of baseline operational-risk capital at 2 per cent. The rate would fall to 1.5 per cent on the next $30 billion and 1 per cent above $50 billion, applied as marginal bands so that crossing a threshold changes the rate only on the additional issuance. The memo also adds 25 per cent of the issuer's three-year average annual revenue from non-reserve assets to the baseline. At $10 billion outstanding with no non-reserve revenue, the baseline issuance portion would be $200 million, a figure that remains entirely within the first band.
The formula would apply to approved stablecoin-issuing subsidiaries of insured state member banks and to certain qualifying state-chartered issuers that transition to Fed supervision — specifically, per the memo, uninsured state-chartered depository institutions with at least $10 billion in payment stablecoins outstanding that transition under the GENIUS Act. That scope is narrower than the dollar stablecoin market as a whole. Covered issuers would separately have to hold eligible reserve assets with a fair value at least equal to the par value of their outstanding coins, and the Fed proposes a 2 per cent capital charge on reserve assets that are uninsured deposit claims or undercollateralized reverse repurchase agreements, a credit-risk measure kept apart from the operational-risk calculation.
The Office of the Comptroller of the Currency's pending proposal takes a different route for issuers under its jurisdiction. Its March proposal would set an initial minimum capital amount for a newly chartered or licensed issuer based on its own business plan and risks, generally subject to a $5 million floor during a de novo period, with ongoing capital commensurate with the issuer's business model and risk profile; the proposed rule text leaves that amount to a supervisory assessment. The OCC would also require readily available liquid assets equal to 12 months of total expenses, identified apart from the assets backing stablecoins. The agency discussed a variable capital component based on coins outstanding as an alternative and sought comment on it, but omitted a percentage-based charge from its proposed text.
The OCC proposal was published in the Federal Register on March 2 and its comment period closed on May 1. The Fed says comments on its proposals will close 60 days after Federal Register publication; its Sept. 24 release gave no calendar deadline. Both Fed proposals, announced alongside a separate plan for how insured state member banks would apply to issue payment stablecoins through subsidiaries, remain open to revision through rulemaking, and each regulator's eventual total requirement is undetermined. The next consequential details are the final calibration of the Fed's loss adjustment and how each regulator settles its capital and liquidity rules after comments.
