- FDIC proposes a formal approval process for banks seeking to issue payment stablecoins.
- Only FDIC-supervised banks can issue stablecoins through approved subsidiaries.
- Rules focus on safety, full reserves, and strict redemption requirements.
U.S. regulators are tightening the rules around who gets to issue stablecoins, and how. On December 16, the Federal Deposit Insurance Corporation approved a proposed rule that explains how banks must apply to issue payment stablecoins under the GENIUS Act, a law passed earlier this year to bring stablecoins under federal oversight.
Rather than opening the door to crypto-native firms, the proposal places stablecoin issuance firmly inside the traditional banking system.
Stablecoins have grown into an important piece of crypto market infrastructure, handling billions of dollars in daily transactions. But regulators worry that without clear rules, these digital tokens could pose risks similar to those seen during past crypto collapses.
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Who Would Be Allowed to Issue Stablecoins?
Under the proposal, banks cannot issue stablecoins directly. Instead, they must create a separate subsidiary and apply for FDIC approval.
Only FDIC-supervised, state-chartered banks and savings associations are eligible. Most crypto companies would be excluded unless they partner with a regulated bank.
In practical terms, this means:
- Stablecoins would be issued by bank-linked entities, not standalone crypto firms
- Issuers would fall under existing banking supervision
- Approval could be denied if activities are deemed unsafe or unsound
The FDIC would review applications based on financial strength, risk controls, and management quality. Stablecoins must be fully backed, easily redeemable, and supported by strong compliance systems.
What Can Approved Stablecoin Issuers Actually Do?
The proposal limits stablecoin activities to payments and related services. Issuers would not be allowed to reuse reserves or engage in speculative activities.
Allowed activities are narrowly defined:
- Issuing and redeeming payment stablecoins
- Managing reserve assets
- Providing custody and safekeeping services
What Happens If an Application Is Denied?
The law sets firm timelines. The FDIC must act within 120 days of receiving a complete application. If it fails to do so, approval may be automatic.
Applicants who are denied can appeal, including requesting a formal hearing. However, regulators retain wide discretion to impose conditions or block proposals they consider risky.
What Does This Mean for Crypto?
The proposal makes one thing clear: stablecoins are being pulled closer to traditional banking, not treated as an extension of the open crypto market.
For banks, the rule creates a regulated path into digital payments. For crypto firms, it reinforces a reality many already face, issuing widely used stablecoins in the U.S. might require a bank partner.
Public comments on the proposal will be open for 60 days, with final rules expected well ahead of the GENIUS Act’s 2027 effective date.
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Source: https://coinedition.com/fdic-moves-to-formalize-how-banks-can-issue-stablecoins-under-genius-act/
