The Federal Deposit Insurance Corporation (FDIC) approved a proposed rule on April 7 that begins to define how U.S. banks and their subsidiaries may issue and manage stablecoins under the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act). This marks a significant step in the federal oversight of dollar-pegged digital assets.
Permitted Payment Stablecoin Issuer Framework and Reserve Requirements
The framework designates permitted payment stablecoin issuers (PPSIs) as subsidiaries of FDIC-supervised institutions. It sets comprehensive standards for reserves, redemption practices, capital, liquidity, cybersecurity, and risk management. The proposal is now open for a 60-day public comment period.
Core requirements mandate that issuers maintain full backing of stablecoins on a 1:1 basis with eligible reserve assets. These reserves must be monitored daily and held separately from other business activities. Eligible assets include U.S. currency, balances held at Federal Reserve Banks, insured bank deposits, short-term U.S. Treasury securities, and certain overnight repurchase agreements. The proposal also imposes concentration limits on reserve holdings and restricts exposure to counterparties, ensuring the reserves remain highly liquid and low risk to guarantee redemption capacity during periods of stress.
Redemption standards form a central component of the rule. Issuers must publish clear redemption policies and generally process redemption requests within two business days. In cases where large withdrawals exceed 10% of outstanding issuance within a 24-hour period, issuers must notify regulators and may request extensions.
FDIC's Capital, Liquidity, and Cybersecurity Framework
FDIC Chair Travis Hill stated in prepared remarks that the framework addresses operational risk and financial stability concerns as stablecoin usage expands in payments infrastructure. New PPSIs are required to hold a minimum of $5 million in capital for their first three years of operation, with additional requirements possible based on supervisory assessment. Ongoing capital must consist primarily of common equity tier 1 and additional tier 1 instruments.
In addition, issuers need to maintain a separate liquidity buffer equal to 12 months of operating expenses, distinct from the reserve requirements backing issued stablecoins. The rule addresses cybersecurity and operational resilience, requiring issuers to maintain systems covering private-key management, blockchain monitoring, incident response, and independent audits. Annual compliance certifications related to anti-money laundering and counter-terrorist financing programs are also mandated.
The FDIC clarified that stablecoins issued under this framework would not receive deposit insurance protections under the standard $250,000 coverage limit. Reserves held at insured institutions would be treated as corporate deposits of the issuer, not individual stablecoin holders. However, tokenized deposits that meet the legal definition of a bank deposit would receive standard deposit insurance treatment regardless of the technological format used.
The FDIC's action follows earlier implementation efforts tied to the GENIUS Act and comes alongside parallel rulemaking from other banking regulators, including the Office of the Comptroller of the Currency (OCC). The proposal is expected to be revised following the public comment process before final adoption. The GENIUS Act sets a statutory deadline for implementation by mid-2026, placing pressure on regulators to finalize a unified stablecoin framework in the coming months.