Circle · Federal Reserve (FED) · CryptoSlate
Fed proposed stablecoin rule could trigger a 48-hour liquidation run
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The Federal Reserve's proposed rules for the payment stablecoin issuers it supervises include a crisis clock measured in hours.
Key facts
- The total stablecoin market stands near $307.3 billion, with USDT at about $183.7 billion and USDC at $76.4 billion as of Sept. 25
- Extending the same arithmetic, $50 million in par redemptions would leave $0.90 per token, and $80 million would leave $0.75
- The Fed illustrates the logic with a $100 million stablecoin backed by $95 million in reserves
- Once $35 million redeems at full par value, $60 million in assets remains against $65 million in tokens, leaving about $0.92 of backing for everyone who holds
Summary
01 A reserve shortfall would trigger Fed notice and a restoration plan within 24 hours, then rapid liquidation. 02 Issuers could keep minting during the rescue window to avoid an on-chain signal that accelerates a run. 03 Pro-rata liquidation aims to stop early redeemers from shifting larger losses onto remaining holders. Unless it closes the gap or the Fed directs it to proceed with that plan, the issuer must begin liquidating reserves and redeeming tokens by 5 p.m. on the next business day.