The U.S. Federal Deposit Insurance Corporation, or FDIC, has taken a major step toward defining how regulated stablecoins could operate inside the American banking system. Through a newly proposed rule, the agency is beginning to spell out how U.S. banks and their subsidiaries may issue and manage dollar-pegged digital assets under the framework created by the GENIUS Act. This marks an important shift in federal oversight, as stablecoins move from the edge of crypto markets toward a more formal role in payments infrastructure.
The proposal, approved on April 7, focuses on entities classified as Permitted Payment Stablecoin Issuers, or PPSIs. According to the FDIC’s framework, these issuers are expected to function as subsidiaries of institutions already supervised by the FDIC. The draft is now open for a 60-day public comment period, which means industry participants, banks, legal experts, and other stakeholders will have a chance to respond before the rule is finalized.
This effort is tied directly to the Guiding and Establishing National Innovation for U.S. Stablecoins Act, better known as the GENIUS Act. The law directs federal banking regulators to build a unified regulatory system for stablecoin issuance in the United States. In that context, the FDIC is not acting in isolation. Rather, it is developing one piece of a broader federal architecture meant to standardize how bank-related stablecoins are governed, supervised, and integrated into the financial system.
Reserve backing and redemption rules form the foundation
At the center of the proposal is a strict requirement that issued stablecoins must be fully backed on a 1:1 basis by eligible reserve assets. The FDIC says those reserves must be monitored daily and kept separate from other business activities. This segregation requirement is important because it is meant to prevent reserve assets from being mixed with general corporate funds or exposed to unrelated business risks.
The list of eligible reserve assets is intentionally narrow and conservative. It includes U.S. currency, balances held at Federal Reserve Banks, insured bank deposits, short-term U.S. Treasury securities, and certain overnight repurchase agreements. The design is straightforward: reserves should be highly liquid, low risk, and capable of supporting redemption even during periods of market stress. The agency also proposes concentration limits on reserve holdings and restrictions on counterparty exposure, reducing the risk that an issuer becomes too dependent on a single asset type or institution.
Redemption is another central pillar of the rule. Issuers would be required to publish clear redemption policies so holders understand the process in advance. In normal circumstances, redemption requests should generally be processed within two business days. If unusually large withdrawals occur, the regulatory response becomes more direct. Specifically, if redemptions exceed 10% of outstanding issuance within a 24-hour period, the issuer must notify regulators and may seek an extension. That provision is clearly designed with run-risk scenarios in mind.
FDIC’s capital, liquidity, cybersecurity, and operational framework
FDIC Chair Travis Hill said in prepared remarks that the framework is meant to address both operational risk and broader financial stability concerns as stablecoin usage expands across payment systems. That framing is significant. The agency is not treating stablecoins solely as a technology product or crypto innovation. It is treating them as instruments that could eventually interact with core financial infrastructure and therefore require prudential safeguards similar to those applied elsewhere in banking.
On the capital side, the proposal would require newly established PPSIs to maintain at least $5 million in capital during their first three years of operation. Supervisors would also retain the ability to impose additional capital requirements depending on the risk profile of the issuer. Ongoing capital is expected to consist primarily of common equity tier 1 and additional tier 1 instruments, showing that the FDIC is borrowing heavily from traditional bank capital concepts rather than inventing an entirely separate framework for stablecoins.
The rule also introduces a distinct liquidity requirement. Issuers would need to maintain a separate liquidity buffer equal to 12 months of operating expenses. Importantly, the FDIC says this buffer is different from the reserves that back issued stablecoins. In practical terms, the reserve pool exists to support redemption of the tokens themselves, while the liquidity buffer is meant to ensure that the issuer can continue functioning as an operating institution. The two requirements address different dimensions of resilience.
Cybersecurity and operational resilience are covered in considerable detail. Issuers would need systems for private-key management, blockchain monitoring, incident response, and independent audits. These requirements signal that federal regulators expect bank-affiliated stablecoin issuers to meet a much higher operational bar than many crypto-native firms have historically faced. The agency is effectively saying that if stablecoins are going to sit close to the banking system, they must be supported by mature controls, tested procedures, and clear accountability.
In addition, the proposal requires annual compliance certifications related to anti-money laundering and counter-terrorist financing programs. This reinforces the view that regulated stablecoin issuance will be treated as a financial activity subject to ongoing compliance obligations, not merely as software deployment or token administration. As a result, any institution entering this space through the banking channel would need robust legal, compliance, risk, and technology coordination from day one.
Deposit insurance limits and the distinction from tokenized deposits
One of the most important clarifications in the proposal concerns deposit insurance. The FDIC states that stablecoins issued under this framework would not receive protection under the standard $250,000 deposit insurance limit. That point matters because market participants and end users may otherwise assume that a stablecoin issued by a bank-affiliated entity automatically carries the same protections as a bank account. The proposal explicitly rejects that assumption.
The agency explains that reserves placed at insured institutions would be treated as corporate deposits of the issuer itself, rather than deposits belonging individually to stablecoin holders. In legal terms, the insurance relationship would attach to the issuer’s deposit arrangement, not directly to each person holding the tokens. That distinction could become highly consequential in a stress event, because it shapes the rights, expectations, and recovery path of token holders.
At the same time, the FDIC draws a line between stablecoins and tokenized deposits. If a tokenized deposit meets the legal definition of a bank deposit, then it would receive standard deposit insurance treatment regardless of the technology used to represent it. This is a meaningful policy signal. Even if two instruments look similar on-chain, their regulatory treatment may differ sharply depending on their legal structure. In other words, “stablecoin” and “tokenized deposit” are not interchangeable categories in the eyes of U.S. banking law.
Public comments, parallel rulemaking, and the mid-2026 deadline
The FDIC’s move follows earlier implementation efforts linked to the GENIUS Act and is unfolding alongside parallel rulemaking from other banking regulators, including the Office of the Comptroller of the Currency. That parallel process suggests the United States is working toward a more coordinated and standardized stablecoin regime rather than relying on fragmented guidance from separate agencies. The direction of travel is becoming easier to see, even if many final details still remain unresolved.
Because the proposal is still in draft form, revisions are expected after the public comment process concludes. Stakeholders are likely to respond on technical issues such as reserve composition, redemption mechanics, capital calibration, and the treatment of custody and operational risk. Those comments could materially shape the final rule, especially since stablecoin design can vary significantly depending on whether the issuer is a bank subsidiary, a fintech partner, or a broader financial group.
The GENIUS Act imposes a statutory implementation deadline by mid-2026, which puts meaningful pressure on regulators to complete a unified framework in the coming months. From a market perspective, that deadline matters because it narrows the period of uncertainty. Firms considering entry into regulated stablecoin issuance now have clearer signals about the likely compliance direction, while existing issuers must pay closer attention to how reserve management, disclosure, redemption processes, and legal classification may evolve under a bank-centered federal model.
More broadly, the proposal suggests that U.S. policymakers are not moving toward a blanket rejection of stablecoins. Instead, they appear to be building a structure in which stablecoin activity can exist inside the regulated financial perimeter, provided it meets strict standards for reserves, capital, liquidity, security, operational resilience, and compliance. If this framework is ultimately adopted and aligned with rules from other agencies, the result could be a more clearly segmented market in which bank-affiliated issuers, tokenized deposit models, and non-bank stablecoin structures each face different legal and supervisory expectations.