Fed proposed stablecoin rule could trigger a 48-hour liquidation run - CryptoSlate

The Federal Reserve has proposed a rule concerning stablecoin reserves that market participants say could accelerate redemption pressures. According to CryptoSlate, the proposal could trigger a liquidation run within roughly 48 hours under stressed conditions — a timeline that matters because stablecoin issuers typically hold reserve assets that take longer than that to convert to cash.

The concern is structural, not speculative. If redemption demands arrive faster than reserves can be sold without losses, issuers may be forced to liquidate assets quickly, potentially transmitting stress into the broader markets where those reserves are held. Stablecoins are widely used as collateral and settlement tools, so disruption at the reserve level can ripple outward.

What to watch: the final rule's specifics, including reserve composition and redemption timelines, plus how issuers adjust disclosures and liquidity buffers during the comment period. The proposal is not yet in force, and its practical effect depends on the details. For now, it is a reminder that stablecoin stability rests on the liquidity of what backs them.