U.S. Banks Cleared to Issue Stablecoins as FDIC Moves to Implement GENIUS Act

U.S. banks are moving closer to issuing dollar-backed stablecoins after the Federal Deposit Insurance Corporation (FDIC) approved a proposed rule that sets out how FDIC-supervised institutions can apply to do so under the GENIUS Act, a stablecoin law signed earlier this year.

The proposal marks the FDIC’s first concrete step toward implementing the legislation and shows a broader shift in how U.S. regulators are bringing digital payment instruments into the traditional banking system.

The FDIC’s Stablecoin Blueprint: Who Gets In, Who Stays Out

The proposed rule, approved unanimously by the FDIC board on Tuesday, would create a formal application process allowing certain state-chartered banks to issue payment stablecoins through separately capitalized subsidiaries.

The framework applies to state nonmember banks and state savings associations supervised by the FDIC.

These banks would not be permitted to issue stablecoins directly on their balance sheets but could do so through a subsidiary that receives prior approval from the agency.

Under the GENIUS Act, only approved entities known as Permitted Payment Stablecoin Issuers are allowed to issue payment stablecoins in the United States.

A payment stablecoin is defined as a digital asset intended for payments or settlement that maintains a stable value, typically backed one-to-one by cash or highly liquid assets such as U.S. Treasury securities.

The law explicitly states that these stablecoins are not deposits, legal tender, or securities.

Here is the FDIC’s Blueprint for Bank-Issued Tokens

The FDIC’s proposal lays out a detailed application process. Banks would be required to submit written requests explaining the structure of the subsidiary, the design of the stablecoin, and how it would maintain price stability.

Applicants must disclose reserve composition, liquidity arrangements, capital levels, governance structures, redemption policies, and reliance on third-party service providers.

The agency also requires information on ownership, management, and control, and bars approval if key personnel have histories of serious financial crimes.

Reserve requirements form a central pillar of the proposal. Stablecoins issued by approved subsidiaries must be fully backed on a one-to-one basis, with clear policies governing reserve management and asset segregation.

Subsidiaries would also need to explain how users can redeem stablecoins for dollars in a timely and transparent manner, including fee disclosures and advance notice of any changes.

To reinforce oversight, each issuer must retain an independent public accounting firm to verify reserve balances through monthly attestations.

What Happens If Regulators Don’t Act? FDIC’s Stablecoin Timer Explained

The timeline outlined in the rule sharply limits regulatory delay.

The FDIC has 30 days to determine whether an application is substantially complete and 120 days to approve or deny it. If the agency fails to act within that period, the application would be deemed approved by operation of law.

Denials must be justified on safety and soundness grounds, and applicants would have access to a dedicated appeals and hearing process.

Notably, the proposal also includes a temporary safe harbor that allows early applicants to request limited waivers of certain GENIUS Act requirements for up to 12 months.

The FDIC will accept public comments on the proposal for 60 days after it is published in the Federal Register.

The move comes amid a broader recalibration of U.S. crypto and digital-asset policy.

Last week, the Office of the Comptroller of the Currency confirmed that national banks may engage in riskless principal crypto transactions, allowing them to intermediate client trades without holding inventory.

Also, the Treasury Department has also begun implementing its responsibilities under the GENIUS Act, including oversight of non-bank stablecoin issuers.