⏱ 2 min read
Issuance itself carries a marginal operational‑risk charge, alongside full 1:1 reserves and potential credit‑risk add‑ons—putting a direct capital price on growth.
The Federal Reserve’s proposed supervisory framework for payment stablecoin issuers would make scale directly capital‑intensive. Under the plan announced Sept. 24, a hypothetical issuer with $1 billion outstanding and no non‑reserve revenue would carry a $20 million baseline operational‑risk capital charge. That figure would be subject to a loss‑history adjustment, and it sits alongside a separate requirement to hold eligible reserve assets equal to the par value of coins outstanding.
How the charge scales
The proposal applies marginal rates to issuance: 2% on the first $20 billion of coins outstanding, 1.5% on the next $30 billion, and 1% on amounts above $50 billion. Because the bands are marginal, crossing a threshold changes the rate only on the additional issuance. On that schedule, an issuer with $10 billion outstanding and no non‑reserve revenue would post a $200 million baseline operational‑risk charge. The Board also proposes adding 25% of the issuer’s three‑year average annual revenue from non‑reserve activities to the baseline figure.
Loss history and other components
Beyond the baseline, the Fed proposes a loss scalar that can move the operational‑risk charge up or down in response to realized losses. An issuer’s total capital requirement could include other components beyond operational risk, depending on its activities and exposures.
Reserves are separate from capital
Capital and reserves serve different purposes in the framework. Covered issuers would be required to maintain eligible reserve assets with a fair value at least equal to the par value of outstanding coins. Separately, the Fed proposes a 2% capital charge on reserve assets that are uninsured deposit claims or undercollateralized reverse repurchase agreements—credit‑risk items that sit apart from the operational‑risk calculation.
Regulatory split to watch
The Office of the Comptroller of the Currency’s pending proposal takes a different route for issuers under its jurisdiction, using a capital amount tailored to each business and a separate pool of liquid assets tied to expenses.
What to watch next
The most market‑sensitive levers are how the loss‑history scalar is calibrated and how non‑reserve revenue is defined and measured. Those details will determine how far issuers can diversify beyond narrow reserve‑only models without materially lifting capital. Issuer‑level disclosures on loss experience and revenue mix, and the final rule text, will be key for sizing capital at scale.
This content is for informational purposes only and does not constitute financial advice.
🧠 HafidWatch Take
The Fed’s proposed schedule gradually lowers the marginal capital charge (from 2% to 1.5% to 1%), but total capital requirements can still rise significantly alongside full reserves. The key variables are the loss-history scalar and the 25% add-on applied to non-reserve revenue, both of which can increase capital beyond the baseline bands. How the Fed finalizes the calibration of loss recognition and the definitions around revenue will ultimately determine whether issuers can scale beyond narrow reserve-only frameworks without facing disproportionate capital burdens. The final rule text on these points will be critical for issuer flexibility.
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