Fed proposes bank-style stablecoin rules, but Barr flags an AML enforcement gap

What happened

On Thursday, September 24, the Federal Reserve Board asked the public for input on two proposals that would move payment stablecoin issuers it supervises toward a more banking-like regulatory structure, requiring full reserve backing, fixed capital requirements, safe custody, and proper approval.

Confirmed

Global impact / market context

Stablecoin issuers would face bank-style rules on reserves, capital, and custody, which could raise their costs and push them to hold safer assets. That may affect how these firms fund themselves and how much cash they keep available.

Analyst inference

The Fed's plan would treat supervised stablecoin issuers more like banks, changing rules for reserves, capital, and custody. Barr also flagged an enforcement gap in anti-money-laundering rules, which are checks to stop illegal money flows.

Analyst inference

What to watch

1. The Federal Reserve Board requested public input on two proposals that would move supervised payment stablecoin issuers to a more banking-like regulatory structure. Confirmed
2. The proposed rules would require issuers to maintain full reserve backing, follow fixed capital requirements, ensure safe custody, and get proper approval. Proposed
3. Barr's flag on an anti-money-laundering enforcement gap may lead to added compliance duties, affecting issuer costs, cash needs, and investor views on stablecoin assets. Analyst inference

Evidence

• cryptopolitan.com