Reserves must back outstanding stablecoins on an at least one to one basis
What the document says“maintain identifiable reserves backing the outstanding payment stablecoins of the permitted payment stablecoin issuer on an at least 1 to 1 basis, with reserves comprising-- (i) United States coins and currency (including Federal Reserve notes) or money standing to the credit of an account with a Federal Reserve Bank”
Subsection (a)(1)(A). The reserve must be identifiable and must at least equal the outstanding stablecoins. The subparagraph then lists eight categories the reserve may consist of, beginning with United States coins and currency or money at a Federal Reserve Bank, and running through insured deposits, short dated Treasury securities, certain repurchase and reverse repurchase agreements, government money market fund shares, other similarly liquid Federal Government-issued assets approved by the regulator, and several of those categories held in tokenized form.
What the document actually says“maintain identifiable reserves backing the outstanding payment stablecoins of the permitted payment stablecoin issuer on an at least 1 to 1 basis, with reserves comprising-- (i) United States coins and currency (including Federal Reserve notes) or money standing to the credit of an account with a Federal Reserve Bank”
The maker must set aside real assets to back its coins. It must be able to point to them. They must be worth at least as much as the coins.
The law lists what the backing may be. Cash counts. Money at a Federal Reserve bank counts. So do some short term loans to the government.
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