The Federal Insurance Deposit Corp. (FDIC) has issued a notice of proposed rulemaking to establish standards by which FDIC-supervised insured depository institutions may apply to establish a subsidiary to issue stablecoins. Because the U.S. banking agencies are likely to promulgate substantially similar processes, all regulated depository institutions should consider encouraging the FDIC and other agencies to hew closely to the statutory considerations for granting such authority.
Key Takeaways
- The Federal Deposit Insurance Corporation (FDIC) Board of Directors has approved a notice of proposed rulemaking (NPRM) to establish an application and approval framework for FDIC-supervised banks seeking to issue payment stablecoins through subsidiaries under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). While the NPRM applies only to institutions regulated by the FDIC, the other federal banking agencies likely will promulgate similar regulations, so all regulated entities should consider encouraging the FDIC to hew closely to the statutory considerations for granting stablecoin issuance authority.
- The NPRM outlines eligibility criteria, application requirements, review timelines, and appeal rights for applicants.
- The NPRM is the FDIC’s first step in implementing the GENIUS Act’s stablecoin framework and signals increased regulatory clarity for FDIC-supervised banks considering stablecoin activities.
- The FDIC is seeking comments on the NPRM and included questions, due 60 days after publication in the Federal Register.
Background
The GENIUS Act establishes a federal regulatory framework for the issuance of “payment stablecoins,” defined generally as digital assets designed to maintain a stable value for use in payment or settlement. The statute limits authority to issue stablecoins in the U.S. to permitted payment stablecoin issues (PPSIs) and assigns oversight responsibility to federal financial regulators, including the FDIC for subsidiaries of FDIC-supervised institutions for which the FDIC is the primary federal payment stablecoin regulator.
On December 16, 2025, the FDIC approved an NPRM that will implement statutory provisions under the GENIUS Act requiring the FDIC to establish an application process and framework for FDIC-supervised insured depository institutions (IDI) to obtain the approval required for the issuance of payment stablecoins through their subsidiaries.
Overview of the Proposed Rule
Eligible Applicants
The proposed rule applies to state-chartered, FDIC-supervised IDIs, including state-chartered banks that are not members of the Federal Reserve System and state-chartered saving associations, that seek to issue payment stablecoins through a subsidiary. An approved subsidiary that receives FDIC approval under the rule becomes a PPSI subject to supervision of the FDIC and may issue payment stablecoins.
Evaluation Standards
In seeking to support the responsible growth and use of digital assets, the FDIC will evaluate applications under safety and soundness criteria specified in the GENIUS Act, including considerations of financial condition, governance, risk management, and compliance capabilities. The proposed rule does not establish additional prudential standards, such as quantitative capital or liquidity requirements, which will be addressed in forthcoming rulemakings, although it would require a discussion of the proposed capital and liquidity structure of the PPSI subsidiary in any application.
Application Requirements
The proposed rule requires applicants to submit an application providing the information necessary for the FDIC to evaluate safety and soundness factors described in the GENIUS Act:
- the business plan for stablecoin issuance and proposed activities of the FDIC-supervised IDI subsidiary
- relevant financial information (three years of pro formas) for the subsidiary including planned capital and liquidity structure, reserve assets and composition and associated asset management plan, and financial projections; the supplementary information notes an expectation that applicants will specifically describe whether any reserves are proposed to be held in tokenized form
- the organization, ownership, and governance structure of the subsidiary
- relevant policies and customer agreements related to custody, segregation of customer and reserve assets, recordkeeping, stablecoin redemption, and Bank Secrecy Act/anti-money-laundering and economic sanctions requirements
- any additional information the FDIC deems necessary to evaluate safety and soundness criteria
The FDIC’s objective is to evaluate applications against statutory safety and soundness factors while minimizing regulatory burden where possible. Accordingly, the FDIC has not proposed safety and soundness factors beyond those listed in the GENIUS Act but has requested comment on whether any such factors should be added. Because the statute and proposed rule permit the FDIC to reject an application only if the activities of the applicant would be unsafe or unsound under the listed factors, any expansion of the relevant factors would be very significant to applicants.
Review Process and Timelines
The proposed rule establishes defined review timelines:
- Completeness Determination: Within 30 days of receipt of an application, the FDIC will notify an applicant whether their application is substantially complete.
- Final Decision: The FDIC generally must approve or deny a complete application within 120 days.
- Deemed Approval: If the FDIC fails to act within the 120-day period, the application would be deemed approved by operation of law.
Denial, Hearing, and Appeal Rights
If the FDIC proposes to deny an application, the applicant will have the right to request a hearing within 30 days of receiving notice. The proposed rule outlines procedures for such hearings and requires the FDIC to issue a final determination within 60 days after the hearing.
Safe Harbor Provisions
The proposed rule provides for a temporary safe harbor for applications submitted to the FDIC before the GENIUS Act becomes effective by allowing applicants to request a waiver of certain requirements of the GENIUS Act lasting up to 12 months. The FDIC may grant such waivers on a case-by-case basis.
Considerations and Next Steps
Institutions evaluating or planning stablecoin initiatives should consider the following.
- Assessing structural options: Evaluate whether this FDIC-supervised IDI subsidiary model aligns with business and regulatory goals.
- Preparing for Application: Begin internal assessments of business plans, financial information, subsidiary ownership and control structures, and relevant policies and procedures that stablecoin issuance will require.
- Engaging With Public Comment Process: Prepare comments in response to the proposed rule application standards, timelines, and questions.
- Monitoring Future Rulemakings: Stay attuned to forthcoming FDIC proposals regarding capital requirements, liquidity requirements, reserve asset diversification, and prudential standards.
Key open questions include how the FDIC will apply and evaluate safety and soundness standards in practice, how the framework under this proposed rule will interact with oversight by other federal financial regulators, whether consortiums of banks and other potential types of investors may have partial ownership of a PPSI that is organized as a subsidiary of an FDIC-supervised institution, and how future rulemakings under the GENIUS Act will shape the broader regulatory environment for stablecoin issuance.