U.S. Banks May Soon Issue Stablecoins Under FDIC’s Proposed GENIUS Act Framework

• FDIC proposal creates a formal approval path for bank-issued stablecoins under the GENIUS Act framework.
• Banks must meet strict safety, reserve, and compliance standards to gain stablecoin issuance approval.
• Early adoption is expected to be limited, with regulators anticipating about ten bank applications annually.

U.S. banks could soon gain a formal means to issue payment stablecoins after the Federal Deposit Insurance Corporation introduced a proposed regulatory framework tied to the implementation of the GENIUS Act. The proposal marks a major step in defining how stablecoins may operate within the traditional banking system, placing them under direct federal oversight while outlining conditions for approval, supervision, and ongoing compliance.

The FDIC board released a notice of proposed rulemaking that explains how FDIC-supervised banks may apply to issue stablecoins through bank subsidiaries. As part of the process, the agency opened a public comment period before finalizing the framework.

Under the proposal, banks would be required to submit detailed applications describing the design and functionality of their stablecoins. The FDIC stated that its review would focus on safety and soundness, governance structures, and risk-control mechanisms. Approval decisions would be made on a case-by-case basis rather than through a standardized authorization.

The structure directly reflects the requirements of the GENIUS Act, a federal law that establishes rules for payment stablecoins. The legislation requires stablecoins to be fully backed by fiat currency or equivalent liquid assets, creating a uniform baseline for reserve standards. While the FDIC acknowledged concerns raised by some observers regarding safeguards, the proposal remains aligned with the statute as enacted.

Acting FDIC Chair Travis Hill said the review process would be tailored and not overly restrictive, with the agency aiming to assess identifiable risks without imposing unnecessary burdens on applicants.

Supervisory Standards and Compliance Expectations

According to the proposal, applications must disclose ownership structures, operational strategies, and reserve management practices. Banks would also need to provide engagement letters from registered public accounting firms. Once approved, stablecoin issuers would remain subject to ongoing supervision.

The FDIC indicated that it would assess whether proposed stablecoin activities pose risks to financial stability. Applications would not be denied unless the agency determines the plans are unsafe or unsound. If regulators fail to act within specified timelines, approvals could be granted automatically.

Approved issuers would be subject to capital, liquidity, and risk management requirements, along with existing anti-money laundering and sanctions compliance obligations.

Early Adoption and Expected Application Volume

The Federal Register notice states that the FDIC expects a limited number of applications in the early stages, estimating roughly ten submissions per year. Application costs are expected to be lower than those associated with traditional banking approvals.

Large financial institutions are already exploring stablecoin use cases. Citigroup, for example, has partnered with crypto firms to test stablecoin payment applications. Recent developments, including the expansion of RLUSD on Coinbase’s Layer 2 network, highlight the growing adoption of regulated stablecoins.