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- Bowman signals incoming rules tightening oversight of banks and stablecoin issuers

- GENIUS Act drives new capital, diversification, and reserve standards for issuers

- Banks and crypto firms face growing tension over charter access and regulatory balance

Federal Reserve Governor Michelle Bowman has issued a clear warning that the regulatory environment for both traditional banks and stablecoin issuers is about to change. In remarks drafted for a House Financial Services Committee hearing, she cautioned that new requirements are nearing completion. She stated that agencies must act swiftly to ensure that financial stability and technological innovation remain aligned as digital-asset activity expands.

According to a Bloomberg report, Bowman stated to lawmakers that her mandate is to support responsible innovation while strengthening regulators' capacity to identify risks arising from new financial technologies. She reiterated that agencies are advancing work on capital and diversification standards required under the GENIUS Act, which obligates stablecoin issuers to register and maintain dollar-for-dollar reserves formally. The law also introduces rules on disclosures, redemption rights, and oversight designed to bring uniformity to the payment-stablecoin segment.

She stated that the Federal Reserve, in coordination with other regulators, will provide clearer expectations for digital-asset activities and issue feedback on new use-case proposals submitted by supervised firms. Bowman added that innovation in financial services can enhance efficiency, widen credit access, and contribute to a competitive environment involving banks, fintechs, and digital-asset companies, provided risks are supervised appropriately.

Tension Between Banks and Digital-Asset Firms Intensifies

Bowman's report arrives at a time of renewed dispute between banks and crypto-related companies competing for access to federal charters. While such charters can offer firms increased legitimacy and broader operational capabilities, traditional lenders have warned that changes to entry standards could create an uneven regulatory environment or weaken long-established charter requirements.

Her remarks also addressed continuing work on major capital reform efforts within the banking system. She confirmed that she is focused on finalizing a series of capital measures, including the long-pending Basel III Endgame package. Bowman stated that her approach is to calibrate the framework from the bottom up rather than tailor it to predetermined capital outcomes.