On December 16, the Federal Deposit Insurance Corporation (FDIC) proposed a new rule that would create a formal, bank‑centric process for issuing payment stablecoins. The rule is designed to implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the GENIUS Act) and would apply to FDIC‑supervised institutions, state nonmember banks and state savings associations, that want to issue payment stablecoins through a subsidiary. With this proposed rule, the FDIC is seeking to “evaluate the safety and soundness of an applicant’s proposed activities based on consideration of statutory factors and support the responsible growth and use of digital assets and related technologies while minimizing the regulatory burden on applicants.”

Background

Under the GENIUS Act, only a “permitted payment stablecoin issuer” (PPSI) is generally allowed to issue payment stablecoins in the U.S. When the issuer is affiliated with a bank, that issuer must be a subsidiary of an insured depository institution and must be approved and supervised by the institution’s primary federal regulator. For FDIC‑supervised institutions, that means the FDIC.

The Act defines a payment stablecoin as a digital asset designed or used as a means of payment or settlement, redeemable for a fixed amount of monetary value, and expected to maintain a stable value relative to that amount. Other types of stablecoins and digital assets fall outside this framework.

The proposed rule translates this statutory architecture into concrete filing procedures, standards, and timelines. The FDIC’s stated objectives are to prioritize safety and soundness, support responsible growth in digital assets and related technologies, and avoid unnecessary duplication or burden for supervised institutions.

What the Proposal Would Do

The rule would add a new section 12 CFR 303.252 to the FDIC’s Rules and Regulations to cover applications by FDIC‑supervised institutions that want a subsidiary to become a PPSI. The bank, not the subsidiary, is the formal “applicant,” and the application would be submitted as a letter to the appropriate FDIC regional office.

In evaluating an application, the FDIC would be required to focus on several key areas:

• The subsidiary’s ability, given its financial condition and resources, to meet the GENIUS Act’s requirements for payment stablecoin issuers, including full reserve backing, monthly reserve disclosures, and forthcoming regulations on capital, liquidity, reserve diversification, and risk management.
• The quality of management such as the competence, experience, and integrity of officers, directors, and principal shareholders, as well as any disqualifying felony convictions in areas such as financial crime or cybercrime.
• The strength and clarity of the redemption framework, including timely redemption for holders, transparent fees, and adequate notice before any fee changes.

The FDIC is not, at this stage, proposing to layer additional discretionary factors on top of those already embedded in the GENIUS Act.

What an Application Must Include

The agency envisions a relatively straightforward but substantive letter application. At a high level, the bank would need to describe the proposed stablecoin itself, the activities of the subsidiary, and any related activities the bank will undertake. This includes explaining how the stablecoin is intended to maintain a stable value, what roles third parties (including any consortium partners) will play, and whether there are intercompany support or guarantee arrangements.

The application must also include financial information for the subsidiary, such as its planned capital and liquidity structure, the composition and management of the reserve assets backing the stablecoin (including any tokenized reserves), and projected financials for the first three years of operation.

Ownership and governance are another focal point. The FDIC expects an organizational chart, organizing documents, and a list of proposed directors, officers, and principal shareholders, along with a statement on whether any have relevant felony convictions.

Finally, the FDIC is requiring the policies, procedures, and customer‑facing documents that will govern the stablecoin program. That includes custody and safekeeping policies, segregation of customer assets and reserves, recordkeeping and reconciliation (on‑ and off‑chain), transaction processing, redemption policies, and Bank Secrecy Act/anti‑money laundering/sanctions compliance frameworks. Terms of use, privacy notices, and required public disclosures should be included as well. An engagement letter with a registered public accounting firm is also required to demonstrate readiness to satisfy monthly reserve attestations.

The FDIC may ask for more information if needed to evaluate the statutory factors, but it emphasizes that it will rely on existing supervisory information wherever possible.

Timelines, Approvals, and Appeals

The GENIUS Act imposes tight timelines that the FDIC’s proposal largely incorporates verbatim.

Within 30 days of receiving an application, the FDIC must determine whether it is “substantially complete” and, if not, identify what is missing. If the FDIC does not respond within 30 days, the application is automatically treated as substantially complete as of the date of receipt. Once an application is substantially complete, the FDIC has 120 days to approve or deny it. If it fails to act within that period, the application is deemed approved.

The FDIC may approve an application outright or approve it subject to conditions. Conditions can address routine implementation issues, such as requiring final organizing documents or completion of planned capital injections, but may not be used to impose requirements beyond those set out for payment stablecoin issuers in the statute.

A substantially complete application can be denied only if the FDIC determines the applicant’s activities would be unsafe or unsound based on the required factors. Any denial must be accompanied by a written explanation within 30 days, specifying the shortcomings and offering recommendations to address them. Denial does not foreclose the possibility of a later application.

Banks have the right to appeal a denial. Within 30 days of receiving the denial, an applicant may request a written or oral hearing. The FDIC must schedule the hearing within 30 days and issue a final determination within 60 days after the hearing. If no hearing is requested, the FDIC will confirm that the denial is final.

Safe Harbor for Early Movers

The GENIUS Act also includes a temporary safe harbor for applications pending as of its effective date. Under this provision, the FDIC can waive some or all statutory requirements for a period of up to 12 months after the Act takes effect. Applicants seeking to rely on the safe harbor would submit a written waiver request alongside their application, explaining which requirements should be waived, why, and for how long. The FDIC is not codifying detailed waiver procedures, emphasizing the temporary and case‑by‑case nature of this relief.

Our Take

In short, the FDIC is opening a pathway for FDIC‑supervised institutions to participate in the payment stablecoin market but only with bank‑grade governance, transparency, and risk management wrapped around those activities.