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Fed proposal adds operational-risk capital charge tied to stablecoin supply

Under the plan, a hypothetical issuer with $1.0 billion in payment stablecoins would face a $20.0 million baseline operating-risk capital charge before adjustments.

Reported · Written up by our desk · Regulation

The Federal Reserve has outlined a supervisory framework for certain payment stablecoin issuers that ties capital requirements to the amount of stablecoins outstanding, according to CryptoSlate. CryptoSlate reports that in a hypothetical case of an issuer with $1.0 billion in circulation and no revenue other than its reserve assets, the plan would begin with a $20.0 million baseline operational-risk capital charge. The framework would also require a separate loss-history adjustment and other applicable capital charges, and issuers would still need reserves backing their coins.

The proposal would give stablecoin growth a direct capital consequence, with more coins outstanding increasing the baseline operating-risk charge even if the issuer earns nothing from custody or other activities, CryptoSlate said. The formula is described as applying to approved stablecoin-issuing subsidiaries of insured state member banks and to certain qualifying state-chartered issuers that transition to Fed supervision.

CryptoSlate also notes that the Office of the Comptroller of the Currency has a separate pending approach for issuers under its jurisdiction, using a capital amount tailored to each business and a separate pool of liquid assets tied to expenses. For the first $20 billion of payment stablecoins outstanding, the Fed would calculate the issuance portion, the outlet added.

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