The FDIC board voted on 7 April to advance a comprehensive prudential framework governing how federally supervised banks can issue, back, and redeem payment stablecoins, including a two-business-day redemption requirement.
The Federal Deposit Insurance Corporation's board approved a notice of proposed rulemaking on 7 April that would establish the first comprehensive prudential framework for bank-issued stablecoins under the GENIUS Act — the federal stablecoin licensing regime signed into law in mid-2025.
The proposed rules, which now enter a 60-day public comment period, cover almost every operational aspect of what the FDIC calls permitted payment stablecoin issuers, or PPSIs. Reserve asset requirements, redemption timelines, capital rules, permissible activities, custodial obligations, and risk management standards are all addressed in a single regulatory package. The message from the FDIC is clear: if banks want to issue stablecoins, they'll do so under banking-grade supervision.
The headline requirement is a two-business-day redemption mandate. Any bank issuing a payment stablecoin under FDIC supervision must redeem it within two business days of a holder's request — a standard that aligns stablecoins with the settlement expectations of traditional payment systems rather than the instant redemption that crypto-native issuers like Circle typically offer for USDC. The two-day window gives banks operational breathing room to liquidate reserve assets without fire-sale risk, but it also introduces a gap that traders and DeFi protocols will notice. In a market where stablecoins function as real-time settlement rails, a 48-hour delay could create arbitrage opportunities and depegging pressure during periods of heavy redemption demand.
Reserve requirements are strict. PPSIs must maintain one-to-one backing in eligible assets — a category the FDIC defines narrowly, excluding the riskier instruments that some offshore stablecoin issuers have historically relied on. The proposed rule specifies that deposits held as reserves backing a payment stablecoin will not be insured to stablecoin holders on a pass-through basis. That distinction matters: it means a stablecoin holder's claim in a bank failure sits behind depositors in the recovery queue, not alongside them.
The capital rules add another layer. Both the issuing entity and its parent insured depository institution face capital requirements calibrated to the stablecoin's outstanding supply and the risk profile of the reserve assets. The effect is to make bank-issued stablecoins considerably more expensive to operate than their unregulated equivalents — a deliberate design choice that the FDIC frames as prudential but that critics will argue favours incumbents over innovators.
FDIC Chairman Travis Hill, in a statement accompanying the vote, framed the proposal as "completing the regulatory architecture that the GENIUS Act requires." The Act set a July 2026 deadline for federal agencies to finalise their implementing rules, and the FDIC's proposed rulemaking — arriving with roughly three months to spare after the comment period — is on track to meet it. The Office of the Comptroller of the Currency published its own parallel framework last month, and the two agencies have coordinated to ensure consistency across nationally chartered and state-chartered banks.
One section of the proposal that has drawn immediate attention addresses tokenised deposits. The FDIC confirmed that deposits recorded in tokenised form — using blockchain-based ledgers rather than traditional database entries — would still be treated as deposits under the Federal Deposit Insurance Act, provided they meet the statutory definition. Deposit insurance treatment, the agency said, "should not depend on the technology or recordkeeping system used to reflect a bank's deposit liabilities." That language gives banks a green light to experiment with on-chain deposit products without losing FDIC coverage, a significant clarification that several large banks have been waiting for.
The practical implications split along predictable lines. For the handful of banks already positioning to issue stablecoins — including SoFi, which launched its SoFiUSD token on Solana earlier this month, and JPMorgan, whose JPM Coin has operated in a closed institutional loop since 2019 — the rules provide a defined path to compliance. For crypto-native stablecoin issuers like Circle and Tether, the rules create a regulatory moat around bank-issued competitors that enjoy the implicit backing of the federal banking system.
The CLARITY Act's ongoing congressional deadlock over whether stablecoins should be permitted to offer yield adds further complexity. If the Act passes with a yield prohibition, bank-issued stablecoins operating under GENIUS Act rules would compete on trust and regulatory clarity rather than returns — a contest that favours banks. If yield is permitted, crypto-native issuers with leaner cost structures could maintain their edge despite lacking the FDIC's regulatory endorsement.
The European approach under MiCA has already prompted a consortium of twelve banks to launch a euro-pegged stablecoin, suggesting that bank participation accelerates once regulatory clarity exists. The FDIC's rules could trigger a similar wave in the US — though the American banking system's greater complexity, with its overlapping federal and state jurisdictions, makes the timeline less predictable.
Comments on the proposed rule will be accepted for 60 days after publication in the Federal Register. Given the number of stakeholders affected — banks, crypto firms, payments companies, and consumer advocates — the comment period is likely to produce substantive pushback on the redemption timeline, capital requirements, and the scope of permissible activities. The final rule, expected before the July deadline, will determine whether bank-issued stablecoins become a meaningful part of the US payments infrastructure or remain a regulatory curiosity that few institutions bother to pursue.
