The FDIC has approved proposed rules requiring stablecoin issuers to honour redemptions within two business days, maintain one-to-one reserve backing, and meet capital and risk management standards — while explicitly excluding stablecoin holders from deposit insurance protection.
The Federal Deposit Insurance Corporation approved a notice of proposed rulemaking on 7 April that would establish reserve, redemption, capital, and risk management requirements for FDIC-supervised stablecoin issuers operating under the GENIUS Act — the second set of rules the agency has written to implement the law since President Trump signed it last year.
The headline requirement is a two-business-day redemption window. Any permitted payment stablecoin issuer supervised by the FDIC must honour a holder's redemption request within that timeframe, establishing a liquidity standard that sits between the instant-redemption expectation of most crypto users and the T+1 settlement window that governs traditional securities. For issuers accustomed to processing redemptions at their own pace — Tether has historically taken days to process large redemptions, while Circle's USDC typically settles within hours — the two-day ceiling creates a binding floor.
Reserve asset requirements form the second pillar. The proposed rule mandates that issuers maintain identifiable reserve assets on at least a one-to-one basis to fully back all outstanding stablecoins. The FDIC did not specify which assets qualify in the press release, but the GENIUS Act itself requires reserves to consist of high-quality liquid assets — US Treasuries, insured deposits, and central bank reserves — a standard that disqualifies the commercial paper and corporate bond holdings that Tether once favoured.
There is a significant catch on deposit insurance. The proposed rule states explicitly that deposits held as reserves backing a payment stablecoin would not be insured to stablecoin holders on a pass-through basis. This means that if a stablecoin issuer parks its reserves in an FDIC-insured bank and that bank fails, the stablecoin holders do not receive deposit insurance protection — only the issuer itself, as the depositor of record, would be covered up to the $250,000 limit. For a stablecoin with billions of dollars in reserves spread across multiple banking partners, the practical protection is negligible.
The rule does, however, clarify the treatment of tokenised deposits — a category that has generated confusion since several banks began experimenting with blockchain-based representations of traditional deposit liabilities. The FDIC's position is that deposit insurance applies based on the underlying economic reality of the deposit relationship, regardless of the technology or recordkeeping used to record it. A deposit is a deposit whether it sits on a traditional ledger or an Ethereum smart contract; the insurance follows the substance, not the form.
This is the FDIC's second GENIUS Act rulemaking. The first, finalised in December 2025, addressed application procedures for banks seeking to issue stablecoins through subsidiaries. This second rule tackles the prudential framework — the ongoing requirements that issuers must meet after receiving approval. Together, they give FDIC-supervised institutions a complete regulatory roadmap for entering the stablecoin market.
The CLARITY Act's progress through the Senate and the Treasury Department's separate AML rules for stablecoin issuers add further layers to what is becoming a dense regulatory architecture. The FDIC's prudential rules, the OCC's parallel framework for nationally chartered banks, FinCEN's anti-money-laundering requirements, and OFAC's sanctions compliance obligations all apply simultaneously. An FDIC-supervised bank that wants to issue a stablecoin will need to satisfy every one of these overlapping regimes — a compliance burden that favours large institutions with existing regulatory infrastructure over crypto-native startups.
The proposed rule is open for public comment for 60 days following its publication in the Federal Register, which appeared on 10 April. Industry responses will likely focus on the redemption timeline — whether two business days is operationally achievable for large-scale redemptions — and on the deposit insurance exclusion, which stablecoin advocates have argued undermines the consumer protection rationale that the GENIUS Act was supposed to advance.
The comment period closes in early June.
