FDIC’s Proposed Stablecoin Issuance Rules for State Nonmember Bank Subsidiaries

On December 16, the Federal Deposit Insurance Corporation (FDIC) issued a notice of proposed rulemaking, pursuant to the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, that specifies the application requirements and procedures for any state nonmember bank or state savings association that intends to issue payment stablecoins through a subsidiary (the Proposed Rule). The Proposed Rule is limited only to state nonmember banks that are insured by the FDIC. It is anticipated that the Office of the Comptroller of the Currency (OCC), the Federal Reserve and the National Credit Union will issue rules under the GENIUS Act for state member banks, national banks, and credit unions that wish to issue stablecoins.

What Information Does the Proposed Rule Require About the Issuer?

To enable the FDIC to receive the information that it needs to assess an application under the prescribed factors set out in the GENIUS Act, the FDIC will require a letter application from the parent bank that includes information on the following topics:

• the proposed stablecoin and the proposed activities of the proposed stablecoin issuer (Issuer), including any related activities that will be undertaken by the parent bank (e.g., shared technology, reserve custodial services);
• the financial condition of the Issuer, including its capital, liquidity and reserve assets and pro forma financial information for its first three years of operations;
• the proposed ownership, control and management of the Issuer, including its directors, officers and principal shareholders (if different from the parent bank);
• relevant policies, procedures and customer agreements of the Issuer; and
• an engagement letter with a registered public accounting firm that will, as required by the GENIUS Act, perform a monthly examination of the reserves for outstanding payment stablecoins.

What Statutory Factors Must Be Satisfied by the Applicant?

Under the GENIUS Act, the FDIC is responsible for reviewing and evaluating each application under factors specified in the GENIUS Act, which include:

• the ability of the Issuer to satisfy applicable requirements in the GENIUS Act;
• the management of the Issuer, including the competence, experience and integrity of the entity’s officers, directors and principal shareholders, and that no officer or director has been convicted of specified financial crimes;
• whether the Issuer’s policy for redeeming its payment stablecoins complies with the GENIUS Act’s requirements; and
• any other factors established by the applicable regulator that are necessary to ensure the Issuer’s safety and soundness.

A Possible New Regulatory Approach?

The Proposed Rule contains some “user-friendly” intentions regarding the application process.

The FDIC is required to process an application when it is deemed to be substantially complete. Notice of that determination is to be provided within 30 days of submission, with a final decision within 120 days after such determination. Supplemental information requests are to be limited only to those necessary to evaluate an application under the express factors set forth in the GENIUS Act, and no other factors.

Because the FDIC already has available extensive information regarding the applicant bank, the FDIC would, wherever possible, rely on information already available to it as the applicant’s primary federal regulator.

What is the Practical Significance of the Proposed Rule?

The Proposed Rule is a promising statement of what may be forthcoming for future stablecoin issuers. It offers a general conceptual framework of the information required and how it will be evaluated and processed, though it does not provide all of the specific, actionable information required for an application. This information is expected to be issued next year.

• No applications will be accepted by the FDIC until final rules become effective, which is anticipated to be prior to the effective date of the GENIUS Act (the sooner of January 18, 2027, or the 120day after regulators issue any final regulations). The GENIUS ACT requires all primary federal and state payment stablecoin regulators to issue final regulations to implement the act one year after its enactment, or July 18, 2026.
• Among the regulations that must be issued by the FDIC are those regarding capital requirements, liquidity requirements, reserve asst diversification and operational, compliance and information technology risk management principles-based requirements and standards, including Bank Secrecy Act and sanctions compliance for the proposed Issuer.

12 U.S.C.§5901 et seq.

The GENIUS Act also permits nonbank entities, uninsured national banks (e.g., national trust banks) and federal branches of foreign banks to become permitted payment stablecoin issuers with approval from the OCC and nonbank state entities under applicable state payment stablecoin law.

12 U.S.C. §5903.

12 U.S.C. §5904(d)(B)

12 U.S.C. §5913