Federal Reserve Proposes New Rules for Stablecoin Backing and Bank Entry

The Federal Reserve has introduced two new proposals under the GENIUS Act aimed at regulating the digital asset space. The first mandates a strict 1:1 reserve backing for stablecoins, requiring high-quality, liquid assets like U.S. currency, Treasury bills, and central bank reserves, while explicitly banning rehypothecation. The second proposal outlines a streamlined, yet demanding, application process for insured state member bank subsidiaries seeking to enter the digital asset sector, promising a 120-day approval window for qualifying institutions.