Federal Reserve Governor Michelle Bowman issued a stark warning to the digital asset industry Tuesday, telling lawmakers that the implementation phase of the GENIUS Act is imminent.
In a prepared testimony for the House Financial Services Committee, Bowman signaled that the central bank is finalizing a strict supervisory framework that will force stablecoin issuers to compete on a level playing field as traditional lenders.
Related: Feds Governor Foresees Continued Pause With Interest Rate Cuts in 2024
Fed Sees Need for Coordination Across Agencies
Bowman told legislators that her mandate is to support responsible innovation while strengthening supervision of risks arising from new financial technologies. She noted that agencies must continually improve their ability to identify vulnerabilities created by new products, especially those that intersect with banking functions.
According to her testimony, this includes advancing inter-agency work on capital and diversification standards that stablecoin issuers will be required to follow under the GENIUS Act.
That law requires issuers of payment stablecoins to register formally and maintain dollar-for-dollar reserves, along with enhanced transparency and redemption rights. Bowman stated that upcoming guidance is intended to set clearer expectations for digital-asset activities and provide feedback on new use-case proposals submitted by supervised institutions.
Tension Between Banks and Crypto Firms Re-Emerge
Bowman’s remarks come during heightened friction between banks and crypto firms competing for access to federal charter. Financial institutions have warned that granting charters to lightly regulated firms could distort competition or weaken long-standing supervisory standards.
Her remarks also addressed broader capital reform efforts. Bowman confirmed that the Fed is evaluating adjustments to the Basel III Endgame package, one of the major pending capital initiatives for large U.S. lenders. She said her approach is to calibrate the framework from “the bottom up,” rather than apply pre-determined capital outcomes.
She referenced ongoing work to refine the surcharge applied to the largest banks, aligning it with other discussions on the capital framework. Bloomberg previously reported that the Fed has circulated a revised outline of the Basel plan that would ease an earlier proposal introduced during the prior administration.
Related: Sony Targets 2026 Stablecoin Launch to Power PlayStation Payments
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