The FDIC has proposed an application process to implement the GENIUS Act that would allow U.S. banks to issue payment stablecoins through ringfenced subsidiaries, a move unveiled in December 2025 that follows the GENIUS Act’s enactment in July 2025.
Applicants must detail technology, operations and controls for issuance, redemption and ongoing management, including a comprehensive description of the stablecoin and its underlying technology, the blockchain platform and smart contract functions, and end-to-end operational plans.
Robust risk management, governance and capital planning are required, with documentation addressing liquidity to support redemptions under stress scenarios, operational resilience including business continuity and incident response, cybersecurity protections, and compliance with the Bank Secrecy Act (BSA), anti-money-laundering (AML) rules and sanctions regimes.
Applicants must also detail subsidiary structure and governance to demonstrate legal and financial separation from the insured depository institution (IDI), and provide forward-looking financial projections and stress-testing results to show capital adequacy.
Stablecoins must be 1:1 backed with high-quality liquid assets and are not FDIC-insured, with reserves limited to U.S. dollars held in segregated accounts at regulated institutions, U.S. Treasury securities with maturities of 12 months or less, or other low-risk, liquid cash equivalents approved by regulators.
Issuers would face mandatory independent audits and monthly public attestations to verify continuous backing and to maintain market confidence, and stablecoin balances issued under this regime are generally not FDIC-insured, so holders rely on issuer reserves and regulatory oversight rather than deposit insurance.
Stablecoin application requirements under the FDIC plan
Consumer protections and market guardrails restrict naming, tying and yield, including a ban on deceptive naming that could imply government backing or FDIC insurance, a prohibition on tying arrangements that condition access to stablecoin services on unrelated purchases, and an explicit ban on paying interest or yield on stablecoin balances to prevent direct competition with interest-bearing deposits.
A 120-day automatic approval mechanism and appeals process shape procedures, with complete applications deemed approved if the FDIC does not act within 120 days, creating a strong incentive to file complete and compliant submissions, and the proposal also contemplates an appeal process for denied applications.
Regulatory clarity opens bank participation while imposing oversight and shaping market dynamics, providing banks with a sanctioned pathway to integrate blockchain-based payment rails and potentially unlocking new revenue from issuance, transaction and settlement services, while forcing upgrades to risk-management frameworks to address digital-asset-specific operational and liquidity risks.
The prohibition on yield may limit stablecoins’ attractiveness compared with other instruments, banks must manage the risk of deposit disintermediation as stablecoins scale, and the framework narrows regulatory gaps between bank and non-bank issuers by imposing comprehensive federal oversight.
The FDIC’s proposed procedures operationalize the GENIUS Act with standards to protect consumers and market stability, setting specific reserve, audit, compliance and governance requirements.
