Federal Reserve Initiates Stablecoin Regulatory Framework

• Lyla Velez
• December 2, 2025
• Policy
• 0 Comments

Federal Reserve Vice Chair Michelle Bowman revealed that bank regulators are formulating new regulations for stablecoins. This announcement underscores the Federal Reserve’s involvement in establishing a regulatory framework aimed at ensuring dollar-for-dollar reserves and financial stability.

The announcement by Vice Chair Bowman highlights the increasing focus on regulating stablecoins, crucial for maintaining financial stability in the crypto industry. This move follows past issues with stablecoins deviating from their pegged value, notably TerraUSD in 2022.

The Federal Reserve, led by Vice Chair Bowman, aims to develop capital, liquidity, and diversification regulations for stablecoin issuers. “We are working to develop capital, liquidity, and diversification regulations for stablecoin issuers, ensuring healthy competition between Wall Street, fintechs, and crypto firms,” said Michelle Bowman, Vice Chair for Supervision at the U.S. Federal Reserve. The initiative also involves the FDIC, represented by Acting Chair Martin G. Hill, mandating stablecoin issuers to maintain dollar-for-dollar reserves.

Immediate outcomes are expected to include enhanced market confidence and reduced risks associated with stablecoin operations. The FDIC plans to publish proposals for public consultation by the end of 2025, with implications for crypto firms and investors.

Regulations could impact liquidity flows within decentralized finance (DeFi) ecosystems. The emphasis on USD-pegged stablecoins like USDC and USDT highlights ongoing regulatory interest in crypto market integration.

Financial and regulatory outcomes might see tightened oversight on stablecoin reserves, impacting stablecoin-backed DeFi protocols. Historical trends indicate continued scrutiny on stablecoin operations, as seen with the TerraUSD collapse, driving regulatory actions in the sector.