The Federal Deposit Insurance Corporation (FDIC) issued a notice of proposed rulemaking (NPRM) to establish the application process for FDIC-supervised banks seeking to issue payment stablecoins through subsidiaries. The rulemaking is the first action by the FDIC to implement the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), which establishes a federal regulatory system for stablecoins.
Background
Enacted in July 2025, the GENIUS Act provides a framework for the regulation of stablecoin issuing in the United States. Under the GENIUS Act, only a permitted payment stablecoin issuer (PPSI) may issue payment stablecoins in the US. One type of PPSI contemplated by the GENIUS Act is a subsidiary of an insured depository institution. FDIC-supervised depository institutions (i.e., a state-chartered insured bank that is not a member of the Federal Reserve and each state-chartered savings association) seeking to issue payment stablecoins through a subsidiary must apply to the FDIC for the subsidiary to be approved as a PPSI. The FDIC will serve as the primary federal payment stablecoin regulator for PPSIs that are subsidiaries of depository institutions it regulates.
The FDIC is required to establish a process for the “licensing, regulation, examination, and supervision of [PPSIs] that prioritizes the safety and soundness of such entities.”[1] The FDIC must review and render decisions on applications, evaluating them against certain factors listed in Section 5 of the GENIUS Act, and may deny an application only if the applicant’s activities would be unsafe or unsound based on the factors. Such factors include the ability to meet requirements for issuing payment stablecoins – such as maintaining at least one-to-one identifiable reserves, specified reserve types, monthly reserve disclosures (website and certified reports), factors related to management and redemption policy.
The GENIUS Act will become effective on January 18, 2027, or 120 days after the date on which the primary federal payment stablecoin regulators issue any final implementing regulations, if earlier.
Proposed rule
The proposed rule would establish the application process to become a PPSI, including the required contents of the filing, application processing procedures and time frames, decisions, and hearing and appeal procedures.
- An application must include a description of the proposed stablecoin, subsidiary and applicant activities, stabilization mechanism, any guarantees or intercompany arrangements, and any incidental or digital asset service provider activities. It must also include:
- Detailed information on financials, including planned capital and liquidity structure, reserve assets and composition, and financial projections for the first three years of operations.
- Governance information, including a description of the subsidiary’s ownership and control structure, organizational documents and a list of proposed directors, officers and shareholders.
- Policies, procedures and customer agreements, including on Bank Secrecy Act/anti-money laundering/countering the financing of terrorism (BSA/AML/CFT) and sanctions compliance.
- An engagement letter with a registered public accounting firm for required monthly reserve examinations and certifications.
The FDIC must inform an applicant within 30 days if the application is considered substantially complete. If the application does not contain sufficient information for evaluation, the FDIC must specify the information needed. Notably, the NPRM indicates that the FDIC intends to rely on existing supervisory and examination information it has on an applicant (i.e., on the parent depository institution), rather than requiring duplicative information to be submitted in an application.
- Processing timelines and outcomes. The FDIC must approve or deny an application within 120 days of a substantially complete filing. If no decision is provided, the application is deemed approved. The FDIC may only deny an application if the described activities would be unsafe or unsound under the statutory factors, and must provide a denial letter within 30 days with specific findings and recommendations.
The GENIUS Act specifies that issuance on an open, public or decentralized network cannot be a stand-alone basis for denial.[2]
- Appeals. Applicants may request an oral or written hearing within 30 days of an application’s denial. The FDIC must hold the hearing within 30 days and issue a final determination within 60 days after the hearing. If no hearing is requested in a timely manner, the FDIC will provide notice that the denial is final.
- Safe harbor for pending applications. Applicants filing before the GENIUS Act’s effective date may request waivers of certain of the act’s requirements for up to 12 months from its effective date.
Request for comment
The FDIC seeks comment on various aspects of the proposed rule, including:
- Alignment with GENIUS Act application process. Whether the proposal accurately reflects the GENIUS Act’s application framework and how to better align the rule with the act’s requirements.
- Filing format (letter versus structured form). Whether the letter application proposed in the rule is the best format, or instead should be an FDIC‑developed structured form.
- Sufficiency and clarity of filing contents. Whether the listed application contents are sufficient to evaluate the Section 5 factors and whether it is clear what information the FDIC expects to see in an application.
- Potential “other factors.” Whether the FDIC should consider any additional factors beyond those in the statute.
- Evidence for capital/liquidity and reserves. What information best substantiates capital and liquidity sufficiency and demonstrates appropriate reserve composition, custody and valuation.
- Ownership and control structures (including consortia). What ownership or control structures of a PPSI the FDIC may not have considered and whether the proposal captures the information needed about the structures to evaluate the factors.
- Policies, procedures and customer agreements. Whether the proposal captures the necessary documents while minimizing burden.
- Safe‑harbor waiver procedures. Whether to include regulatory text on GENIUS Act Section 5(f) waivers, and under what circumstances applicants might seek waivers and of which provisions.
- Appeal process. Whether the proposed approach protects due process, minimizes regulatory burden and meets GENIUS Act timelines, and whether alternative appeal processes should be considered.
- Application volume and cost estimates. Whether the estimated number of applications and the associated cost assumptions are accurate.
- Unidentified impacts. Whether there are additional costs, benefits or other effects of the proposal that the FDIC has not identified.
Comments on the NPRM are due within 60 days of its publication in the Federal Register.
What’s next?
The NPRM provides a clear, time‑bound pathway for a subsidiary of an FDIC-regulated depository institution to become a PPSI and issue payment stablecoins, and marks a significant step toward implementing the first major federal crypto legislation in the US. Notwithstanding the amount of information required, the fact that the FDIC may only deny an application if the described activities would be unsafe or unsound under the statutory factors suggests a relative permissiveness of the application process and the FDIC’s intent to support regulated stablecoin issuance for qualified issuers moving forward.
In a statement, Acting Chairman Travis Hill noted that additional rulemakings are forthcoming, such as a rule to establish the statutorily mandated capital, liquidity and risk management requirements for PPSIs. For now, depository institutions that are considering issuing payment stablecoins may consider submitting comments on the proposal and should become familiar with the application requirements to facilitate a smooth application process upon the rule’s finalization.
[1] 12 USC 5904(a)(1)(B).
[2] 12 USC 5904(d)(2)(A)(ii).