Fed Pushes Technology-Neutral Standards for Tokenized Securities, Maps Regulatory Track for Stablecoins
Federal Reserve Vice Chair for Supervision Michelle Bowman told lawmakers on June 4 that banks should face the same capital requirements for tokenized securities as for their traditional equivalents, and that stablecoin issuers need a clear regulatory path.
Testifying before the House Financial Services Committee, Bowman addressed topics ranging from community bank relief to artificial intelligence. Her comments on digital assets drew the most attention from market participants tracking how bank supervision is evolving alongside crypto.
On tokenized securities, Bowman's message was straightforward: the underlying instrument does not change when it is represented on a blockchain. A tokenized Treasury bond remains a Treasury bond, and capital treatment should not shift simply because the settlement or custody technology is different. The approach signals the Fed is aiming to avoid discouraging banks from adopting new infrastructure to hold the same risk exposures.
On stablecoins, Bowman said the Fed is working on a supervisory framework for stablecoin issuers in connection with the broader GENIUS Act now moving through Congress. Her testimony adds institutional weight to the effort by indicating the central bank is building the oversight architecture that prior stablecoin proposals often lacked.
Bowman described the banking system as "sound and resilient," citing strong capital ratios, ample liquidity buffers and solid profitability. She said lending growth remains positive and delinquency rates are at historically low levels. She also pointed to a long-running competitive shift as nonbank financial institutions continue to take market share from traditional banks, with mortgage origination highlighted as a prominent example.
For smaller lenders, Bowman noted the Community Bank Leverage Ratio was finalized at 8%, along with a four-quarter grace period to meet the requirement. She also referenced proposals issued in March 2026 to modernize the broader U.S. regulatory capital framework.
A notable supervisory detail in her remarks was the age of the CAMELS ratings system, which regulators use to assess bank condition. Bowman said it has not been meaningfully updated since 1979. CAMELS evaluates Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk.
Bowman also highlighted planned changes to the Matters Requiring Attention (MRA) framework, the mechanism supervisors use to flag issues at individual banks. The MRA process has faced criticism for uneven application and limited transparency; proposed reforms are intended to make outcomes more predictable and clearer.
Bowman was confirmed as Vice Chair for Supervision in June 2025, succeeding Michael Barr. Since taking the role, she has emphasized a less prescriptive, more principles-based approach and has been more explicit about accommodating innovation.
For tokenized securities, a technology-neutral capital stance would address a major obstacle to bank participation, as banks considering custody or trading of tokenized assets have faced uncertainty over how such holdings would be treated for capital purposes. Several key items remain unresolved: the March 2026 capital proposals still require finalization, a CAMELS overhaul remains at the proposal stage, and the GENIUS Act has yet to clear Congress.
