FDIC Opens the Door for Bank-Issued Stablecoins Under the GENIUS Act

For many years, stablecoins have played an important role in the crypto economy while remaining largely outside the traditional banking system. They are widely used for trading, payments, and moving money across borders, yet most are issued by private crypto companies rather than regulated banks. That situation is now starting to change.

The Federal Deposit Insurance Corporation has begun formal rulemaking that explains how insured US banks can apply to issue payment stablecoins under the GENIUS Act. This is not just another policy discussion. It is the start of a clear regulatory process that could bring bank-issued stablecoins into everyday financial use.

The FDIC’s proposal sets out how banks can issue stablecoins safely and legally. Instead of issuing a stablecoin directly from the insured bank, institutions would need to create a separate subsidiary. This structure is designed to protect customer deposits while still allowing banks to innovate.

Banks that want approval must clearly explain how their stablecoin will work, who it is meant for, and how it will be managed. They must provide detailed financial information, describe who controls the subsidiary, and show how customer funds will be protected. Banks also need to prove that their stablecoin operations can be audited and monitored, just like other regulated financial activities.

One of the most important details is timing. Once an application is considered complete, the FDIC has committed to reviewing it within set deadlines. This gives banks clarity and reduces the uncertainty that has long surrounded crypto-related regulation.

In the past, US regulators mainly focused on warning banks about the risks of crypto. Guidance often emphasized caution without explaining how participation could happen in practice. The FDIC’s current move is different. It outlines a pathway to approval. This shift signals that regulators now accept that stablecoins are not going away. Instead of trying to keep them at arm’s length, the focus has moved to controlling how they are issued and used. By allowing banks to enter the stablecoin market under strict rules, regulators are reshaping the competitive landscape.

If banks begin issuing their own stablecoins, these digital dollars would come with strong oversight, regular audits, and consumer protections that many existing stablecoins do not fully offer.

The GENIUS Act provides the legal foundation for this approach. It treats payment stablecoins as financial instruments that can operate within the regulated banking system. The FDIC’s role is to translate that law into practical rules.

By requiring stablecoins to be issued through subsidiaries, regulators are following a familiar model. Banks have long used separate entities to manage new or higher-risk activities. This approach allows innovation while limiting potential harm to the broader financial system. In effect, stablecoins are being positioned as a new type of payment infrastructure rather than a speculative crypto product.

One of the biggest challenges stablecoins have faced is trust. Many users worry about reserves, transparency, and what happens if something goes wrong. Bank involvement changes that conversation. Oversight from regulators like the FDIC brings a level of confidence that many institutions require before adopting new payment tools.

This does not mean bank-issued stablecoins will appear overnight. The process will take time, and not every bank will participate. However, the direction is clear. Stablecoins are moving from the edges of finance toward the center.

Stablecoin Regulation Moves Into the Banking Mainstream

The FDIC’s rulemaking marks a clear shift in how stablecoins are viewed in the United States. Instead of existing mostly outside the banking system, stablecoins are now being guided toward a regulated framework where trust, transparency, and consumer protection come first. While progress will be gradual, this move brings stablecoins closer to becoming a standard part of everyday finance rather than a niche crypto tool.

Do bank-issued stablecoins make you more confident in using digital dollars, or do you think crypto-native issuers will continue to lead the market?