The US Federal Reserve is advancing a proposal to enforce the GENIUS Act with stablecoins.

What's going on?

The U.S. Federal Reserve unveiled its first stablecoin regulatory proposal on Thursday, which includes capital and reserve requirements to ensure that stablecoins have high liquidity assets with full backing and issuers will remain stable in a stressed market environment. It also introduces the stablecoin activities that banks under the Fed's direction can do, as well as offering bonuses for holders of stablecoins.

How important is the prize question?

The Fed noted in the proposal that "certain types of agreements involving third parties are considered to be payments of interest or prohibited rewards by implication", adding that this approach is consistent with the OCC's position for general users, meaning that crypto platforms such as Coinbase may also reward stablecoin holders but more narrowly resembling scoring programs or credit card privileges rather than paying outright "interest".

Why is this so controversial?

How much a company like Coinbase can reward stablecoin holders is one of the most contentious points in the recently failed digital asset Market Clarity Act. As a result, today's GENIUS Act has become the primary law governing stablecoin rewards because attempts to amend it through the clarity act have been unsuccessful.

When do the rules go into effect?

Don't expect to see a rule in effect anytime soon, because the Fed proposal needs public comment before it can be revised and published as a complete version. This process usually takes months, sometimes much longer for users in Thailand. Even though this is an explicitly U.S. regulation, it sets standards on which global platforms Thai users must comply with and may serve as a reference point for regulatory agencies including the SEC (Thailand) Thailand when considering future stablecoin returns schedules.