Key Takeaways:
- The FDIC approved a proposed rule on April 7, 2026, implementing GENIUS Act standards for stablecoin issuers.
- Permitted payment stablecoin issuers must hold 1:1 reserves in eligible assets and redeem within 2 business days.
- The 60-day public comment period closes before the GENIUS Act’s July 18, 2026 regulatory deadline.
FDIC Moves on GENIUS Act Stablecoins
The proposed rule targets permitted payment stablecoin issuers, or PPSIs, which are typically subsidiaries of FDIC-supervised insured depository institutions such as state nonmember banks and state savings associations. The GENIUS Act, codified at 12 U.S.C. 5901-5916, bars non-permitted entities from issuing payment stablecoins in the United States and directs federal banking agencies to finalize regulations by July 18, 2026.
Under the proposal, PPSIs must hold reserves backing outstanding stablecoins on a 1:1 basis at all times. The fair value or face value of those reserves must equal or exceed the consolidated par value of outstanding coins. Reserves must be monitored daily and kept separate from the issuer’s other assets.
Eligible reserve assets are limited to low-risk, highly liquid instruments. Those include U.S. coins and currency, balances at Federal Reserve Banks, demand deposits at insured depository institutions, U.S. Treasury securities with a remaining maturity of 93 days or less, overnight repurchase agreements, overnight reverse repos overcollateralized by eligible Treasuries, and shares in money market funds invested solely in those assets.
The proposal caps counterparty exposure at 40% of total reserves. PPSIs must also demonstrate the operational ability to quickly access and convert reserves to cash if needed.
On redemption, the rule requires PPSIs to publicly disclose a redemption policy and generally fulfill requests within two business days. For large redemptions exceeding 10% of outstanding issuance value in any 24-hour period, a PPSI must notify the FDIC and may request an extension at the agency’s discretion.
Capital requirements are principles-based. New PPSIs face a $5 million minimum capital requirement, or a higher amount if conditioned by regulators, for their first three years of operation. Ongoing capital must consist of common equity tier 1 and additional tier 1 instruments, with no Tier 2 capital permitted. Parent banks must deconsolidate PPSI subsidiaries for regulatory capital purposes.
PPSIs must also maintain a separate pool of highly liquid assets equal to 12 months of total operating expenses. This operational backstop is distinct from the 1:1 reserve pool. Failure to meet capital or liquidity requirements triggers mandatory FDIC notification and potential suspension of new issuance.
The proposal addresses cybersecurity directly. PPSIs must maintain a comprehensive information technology framework covering smart contract controls, private-key management, blockchain monitoring, incident response, and independent testing. Annual AML/CFT program certifications are also required.
On deposit insurance, the rule states that deposits held by insured banks as PPSI reserves are insured only as corporate deposits of the PPSI, up to the standard $250,000 limit. Pass-through coverage to individual stablecoin holders does not apply. That position reflects the GENIUS Act’s prohibition on deposit insurance for stablecoins.
The rule also clarifies treatment of tokenized deposits. If a tokenized liability meets the Federal Deposit Insurance Act’s definition of “deposit” under 12 U.S.C. 1813(l), it receives the same insurance treatment as a traditional deposit, regardless of the underlying technology.
This is the FDIC’s second GENIUS Act rulemaking. The agency issued its first proposed rule Dec. 19, 2025, establishing application procedures for banks seeking PPSI approval through a subsidiary. Comments on that rule were extended to May 18, 2026.
The FDIC is accepting public comments on the new proposal for 60 days following Federal Register publication. The agency is seeking input on reserve buffers, additional eligible asset types, concentration limits, bankruptcy-remote structures, and the treatment of uninsured deposits.
The GENIUS Act takes general effect no later than Jan. 18, 2027, or 120 days after federal agencies finalize their regulations, whichever comes first.
