The Federal Deposit Insurance Corporation (FDIC) released a proposed rule this morning, December 17th, stipulating that state banks or savings institutions under its supervision must issue "payment stablecoins" through approved subsidiaries and complete formal application and review procedures in accordance with the GENIUS Act. The FDIC's purpose in issuing this rule is to clarify the practical application system and review timeline before the GENIUS Act takes effect, providing a clear legal framework for the banking system to issue stablecoins in the future.
The GENIUS Act has been passed and will officially take effect in early 2027.
The document states that the GENIUS Act was passed on July 18, 2025, and is expected to come into effect on January 18, 2027, or 120 days after the principal regulatory authority completes its final implementation rules.
According to this law, the issuance of payment-type stablecoins within the United States can, in principle, only be carried out by "Qualified Payment-Type Stablecoin Issuers" (PPSIs). Assuming the issuer is a subsidiary of a bank, its primary regulatory authority will be the same as that of the parent bank.
The primary regulator for state non-affiliated banks and state savings institutions is the FDIC.
Banks themselves are not allowed to issue currency; this can only be done by approved subsidiaries.
The FDIC document explicitly states that banks cannot directly issue payment-type stablecoins and must do so through a "bank subsidiary".
Furthermore, the subsidiary needs FDIC approval to obtain PPSI status. In principle, it is prohibited to issue payment-type stablecoins in the United States without approval.
Application materials must be confirmed within 30 days, and results must be provided within 120 days.
According to the regulations, after a bank submits an application to the FDIC for the issuance of a payment-type stablecoin, the FDIC must notify the applicant within 30 days whether the application has sufficient information to proceed to substantive review. If the information is insufficient, the missing items must be clearly stated.
If the FDIC does not respond within 30 days, the application will automatically be deemed "fully documented." Once an application is deemed fully documented, the FDIC must complete the approval or rejection process within 120 days. If no response is received within this period, the application will be automatically deemed approved.
The document also emphasizes that the FDIC can only reject applications based on security and soundness risks, and cannot use the fact that stablecoins are issued on public, decentralized blockchains as a reason for rejection.
FDIC's proposed three key areas of review
1. Are reserve assets in place? A 1:1 full guarantee becomes the core threshold.
During the review process, the FDIC will prioritize examining whether the applicant subsidiary has the capacity to comply with the issuance standards set forth in Section 4 of the GENIUS Act, including:
- Each payment stablecoin must be backed by a 1:1 identifiable reserve asset, and the reserve asset must meet the prescribed asset type.
- The applicant must also disclose the composition of the reserve assets on a monthly basis, and the relevant reports must be reviewed and confirmed by an accountant.
In addition, the regulations generally prohibit the re-pledge, reuse, or repeated use of reserve assets to ensure that the basis for stablecoin redemption is not misappropriated.
2. Compliance of Management: Governance Structure and Background Under Comprehensive Examination
The document stipulates that during its review, the FDIC will examine whether the subsidiary's directors and senior executives have been involved in major criminal cases such as insider trading, financial fraud, money laundering, terrorist financing, and cybercrime, and will also assess whether the management team has sufficient experience, professional competence, and past compliance record.
In addition to personnel backgrounds, the FDIC will also review the equity structure, actual control relationship, and related financial commitment arrangements between subsidiaries and their parent banks to confirm whether the overall governance structure is clear and manageable.
3. The redemption mechanism must be transparent: fees and procedures must not be changed temporarily.
The FDIC will also focus on reviewing whether the exchange policies of payment stablecoins are clear and enforceable, including whether they provide an immediate and clear exchange mechanism and disclose all purchase and exchange-related fees to users in plain language.
The document also requires that any adjustments to the relevant fees must be announced to the public at least 7 days in advance, and the exchange process, restrictions, and possible suspension or postponement of the exchange must be clearly stated and cannot be changed temporarily.
Application materials submitted in one go, with full disclosure of financial governance and internal controls.
The document states that if a bank wants to issue a payment-type stablecoin through a subsidiary, it must submit a complete application to the FDIC, including:
- The design architecture, uses, and actual operation of stablecoins.
- Financial forecasts for the next three years.
- Capital structure and liquidity arrangements.
- Composition and management plan of reserve assets.
The application documents must also cover the subsidiary’s organizational structure and governance structure, customer agreements, asset custody and internal control systems, and compliance mechanisms with the Bank Secrecy Act (BSA), anti-money laundering and sanctions regulations, and include cooperation documents with the accounting firm.
The FDIC emphasizes that, in principle, it will not require duplicate submission of information already in the possession of its existing supervisors, in order to reduce the burden on banks' applications.
There are still remedies if the application is denied; the reasons for denial and the appeal process are clearly stated.
If an application is rejected by the FDIC, the supervising authority must provide a written explanation within 30 days, specifically pointing out the problems in the application and areas for improvement.
Banks can apply for a hearing within 30 days of receiving the rejection notice, and the FDIC must make a final decision within 60 days after the hearing. The document also clarifies that even if the application is rejected, it will not affect the bank's ability to submit another application in the future.
A transition period of up to one year will be provided before the regulations officially take effect.
The document also states that organizations that have already submitted applications before the GENIUS Act officially takes effect can apply to the FDIC for a temporary exemption, with the exemption period lasting up to 12 months. The FDIC will review these applications on a case-by-case basis and will not adopt a one-size-fits-all approach.
This article, titled "US FDIC Announces New Regulations for Stablecoin Issuance, Banks Must Have Approved Subsidiaries Handle Coin Issuance," first appeared on ABMedia, a ABMedia .
