Two hundred and seventy-seven questions

At half past two on Thursday afternoon the Federal Reserve Board released two documents and a vote — taken twice, once on each, and both times it was Chairman Warsh, Vice Chair Jefferson, Vice Chair for Supervision Bowman and Governors Barr, Cook, Powell and Waller in favour, none against. Each document carries a line near the top reading ACTION: Notice of proposed rulemaking. That line is the story, and it is the line the coverage dropped.

Nothing has been ruled. The Board has asked. Docket No. R-1899 runs to 392 pages and puts 254 numbered questions to the public; Docket No. R-1900 is sixty pages of application procedure and adds twenty-three. Comments are due sixty days after publication in the Federal Register, and both notices still carry the bracketed placeholder where that date will go: as of Friday evening neither appears in the Federal Register. The clock has not started. The statute takes effect on the earlier of 18 January 2027 or 120 days after final rules, and these are not final rules.

They are the first full description of what a supervised dollar stablecoin must look like. This desk opened the two largest issuers' reserve sheets yesterday and found a ten-day weighted average maturity at one and roughly $38bn of gold, bitcoin and secured lending against a $4.11bn cushion at the other. Proposed section 247.11(b) answers exactly that spread: dollars and Federal Reserve balances, eligible deposit claims, Treasuries with 93 days or less remaining, overnight repo against such bills, over-collateralised overnight reverse repo, government money market funds invested solely in those things, and tokenised versions with identical legal rights. A footnote shuts the obvious door: a fund holding any Treasury with more than 93 days to run would not be eligible. Ten days clears that comfortably. Nothing else on yesterday's page comes close.

Diversification gets a principle rather than a number. Reserves must be "sufficiently diverse" to hold the one-to-one line "at all times, including under stress" and should consist "predominantly of U.S. Treasury securities". Caps were considered and shelved, with the Board asking whether it should have imposed them — the one place where the March 2023 lesson, an issuer stranded at a single failing bank, draws no figure.

Capital is where the numbers are. Two per cent against uninsured deposit claims and undercollateralised reverse repo. A graduated operational-risk charge of 2.0 per cent on the first $20bn of coins outstanding, 1.5 on the next $30bn and 1.0 above $50bn, plus a quarter of three-year average revenue from anything other than reserve assets, plus a scalar keyed to realised losses. New issuers face a floor of $5m for three years, indexed to nominal GDP — a figure the Board calls the lower bound, citing the OCC's own estimate that a viable stablecoin business needs $6.05m to $25m. Miss it at a quarter end and you file a plan; miss it again and you liquidate the reserves and redeem the coins.

Two provisions deserve attention. Redemption, capped at two business days, may be extended at the Board's discretion where an issuer threatens its own soundness or financial stability, or where an extension "would otherwise be in the public interest": a supervised stablecoin is an instrument whose par redemption the state may suspend. And reporting is a confidential weekly return, per coin, of issuance, redemptions, trading volume and reserve assets, against an examination once every twelve months. The supervisory cadence is weekly.

Governor Barr voted for both and published his reservations, the useful document here. He wants comment on whether the rule "adequately addresses interest rate and foreign currency risks" and wants "universal redemption rights" clear in the final text. His objection is the enforcement threshold: an anti-money-laundering deficiency must be "significant or systemic" before the Board may act, a standard he says "may have unknown effects on the Board's ability to effectively substantiate that an institution establishes and maintains compliant programs".

The Board did not bury the Treasury argument in a speech; it wrote it into the economic analysis, under the heading "Increased Demand for U.S. Financial Products". By requiring short-dated bills and Treasury-secured repo as reserves, it says, "the proposal creates structural demand for such securities", with "potential benefits for the funding of the U.S. government" — and is "likely to increase demand for U.S. dollars", because sturdier coins "would allow a broader set of transactions to be denominated in U.S. dollars".

Against that, give the reported plan to push dollar stablecoins overseas the weight it has earned. Bloomberg reported this week that the administration is weighing joint ventures with private firms — possibly involving Treasury, the State Department and the Development Finance Corporation — to spread dollar stablecoins abroad and deepen the bid for Treasuries. Bloomberg's page refuses automated requests and this desk has not read it; the accounts that can be read attribute the plan to people familiar with the discussions and name no country, company, sum or date. It is a deliberation. The 392-page notice is a document, and it already says the quiet part in a paragraph seven governors voted on.

So, for anyone drafting an application: no rule, 277 questions, no comment deadline yet, and a statutory backstop in January 2027 that is closer than this calendar comfortably allows. What it settles is the shape of the argument. The reserve list is short-dated government paper and nothing else; the capital is calibrated to the two exposures that actually broke an issuer once; the reporting is weekly. An issuer whose balance sheet already looks like that has a filing to write. One that does not has already said what it thinks of the perimeter by building a second token to sit inside it.