FDIC and Treasury Unveil Proposed Stablecoin Rules to Advance the GENIUS Act Framework

With the statutory deadline for implementing regulations approaching on July 18, 2026, federal agencies seem to be moving in rapid succession to help bring the payment stablecoin framework Congress enacted last summer into fruition.  In the span of just one week, the Department of the Treasury (“Treasury”) and Federal Deposit Insurance Corporation (“FDIC”) proposed three rules to implement key components of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (“GENIUS Act”), bringing the number of additional required rulemakings closer to zero, with one particularly important proposal still to come: from the Board of Governors of the Federal Reserve System (“FRB”).

First, on April 1, Treasury issued a proposed rulemaking (the “Treasury Proposal”) to establish broad-based principles for determining whether a state-level stablecoin regulatory regime is “substantially similar” to the federal GENIUS Act framework—a key gateway condition for smaller permitted payment stablecoin issuers (“PPSIs”) seeking to operate under state supervision.  Then, on April 7, the FDIC Board of Directors approved a long-anticipated proposal (the “FDIC Proposal”), setting out how subsidiaries of FDIC-supervised insured state nonmember banks and state savings associations may qualify as PPSI.  Finally, on April 8, Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a separate proposed rulemaking to address anti-money laundering (“AML”) and sanctions compliance obligations for PPSIs (the “FinCEN Proposal”).

Below, we summarize and highlight key takeaways from the Treasury and FDIC Proposals; we will address the FinCEN Proposal in a separate post regarding broader AML-related developments from the past week.

Treasury Proposal Clarifies State Supervisory Framework Standards

The Treasury Proposal would implement the GENIUS Act’s provision allowing a “state qualified payment stablecoin issuer”—generally, a nonbank entity organized under state law—with no more than $10 billion in outstanding issuance to opt into state, rather than federal, supervision.  If finalized as proposed, it would require two conditions to be met: (1) the applicable state must certify that its regime is “substantially similar” to the federal regulatory framework; and (2) the Stablecoin Certification Review Committee, to be chaired by the Treasury Secretary and comprising the Chair of the FRB (or the FRB’s Vice Chair for Supervision, if delegated by the FRB Chair) and the FDIC Chair, must unanimously determine that the state’s framework “meets or exceeds” the prudential standards articulated in section 4(a) of the GENIUS Act.

The “federal regulatory framework” against which state regimes would be measured is defined to include the GENIUS Act itself; OCC regulations and interpretations (which would serve as the baseline for most prudential requirements); Treasury regulations and interpretations as they relate to Bank Secrecy Act (“BSA”) / AML and sanctions compliance; and FRB regulations and interpretations for the GENIUS Act’s anti-tying provisions.

The Treasury Proposal distinguishes between two categories of requirements.  First, “uniform requirements,” such as reserve asset standards and BSA / sanctions compliance, must be implemented consistently with federal standards, without materially narrowing the scope.  Second, and by contrast, “state-calibrated requirements,” such as capital and liquidity standards, may be tailored, so long as the resulting requirements would produce outcomes at least as stringent and protective as the federal framework. States would need to maintain comparable frameworks for transition to federal oversight, licensing, supervision, custody, and insolvency.  Additional state requirements would be permitted, provided they do not conflict with federal law or render the state’s regime no longer substantially similar to the federal one.

The Treasury Proposal was published in the Federal Register on April 3, 2026.  Comments are due June 2, 2026.

FDIC Unveils Its Proposed Prudential Framework

The FDIC Proposal is the agency’s second significant rulemaking required under the GENIUS Act.  In December 2025, the FDIC issued a proposed rulemaking that would establish application procedures for subsidiaries of FDIC-supervised insured depository institutions (“IDIs”) seeking approval to issue stablecoins.  Coming on the heels of the Office of the Comptroller of the Currency’s (“OCC”) February 2026 proposed rulemaking to establish a framework for PPSIs under its supervision (the “OCC Proposal”), which we discussed in a previous post, the FDIC Proposal represents another major step toward establishing a coordinated federal prudential regime for payment stablecoins.

The FDIC Proposal would establish a comprehensive prudential framework for FDIC-supervised PPSIs, including requirements related to reserve assets, redemption, capital, and risk management standards, as well as institutions within its jurisdiction that would provide payment stablecoin-related custodial and safekeeping services (“FDIC-supervised Custodians”).

Key features of the FDIC Proposal regarding PPSIs, and points of comparison to the OCC Proposal, include:

• Scope.  The FDIC Proposal would apply to PPSI subsidiaries of FDIC-supervised IDIs.  The OCC Proposal, by contrast, would create a broader stand-alone regime for PPSIs under its jurisdiction, covering bank subsidiaries as well as federal qualified nonbank issuers and foreign PPSIs, and would preserve existing banking powers for OCC-chartered entities under the GENIUS Act.
• Permitted Activities.  The FDIC Proposal would limit a PPSI’s activities to four core activities: issuing, redeeming, and managing reserves related to payment stablecoins, and providing custodial or safekeeping services for payment stablecoins, required reserves, or private keys, although PPSIs also would be permitted to engage in activities that “directly support” or are “incidental to” any of those core activities.
• Prohibitions.  The FDIC Proposal also would prohibit various activities, two of which merit particular attention:

  • Yield.  Consistent with the OCC Proposal, the FDIC Proposal would give effect to the GENIUS Act’s prohibition on paying a stablecoin holder “any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin.”

    The FDIC Proposal would establish a rebuttable presumption of violation where: (1) a PPSI has a contract, agreement, or other arrangement with an affiliate or related third party to pay interest or yield to that affiliate or related third party; and (2) that affiliate or related third party has a separate arrangement to pay interest or yield to stablecoin holders in connection with the holding, use, or retention of that stablecoin.  For this purpose, “related third party” would include, among others, a person offering to pay interest or yield to stablecoin holders “as a service,” as well as a person for whom the PPSI issues stablecoins on the person’s behalf or under the person’s branding.

    A PPSI could rebut the presumption by submitting written materials demonstrating to the FDIC that the arrangement is not prohibited and does not represent an attempt to evade the yield prohibition.  This question of whether stablecoin holders should be able to receive yield has been among the most contested features of the GENIUS Act’s implementation, with fintech nonbanks broadly in favor and banking organizations advocating for a strict ban.

  • Extending Credit.  The FDIC Proposal would also prohibit PPSIs from extending credit to customers for the purpose of acquiring payment stablecoins, citing financial resiliency and leverage concerns as the basis for the prohibition.  The FDIC Proposal solicits comment on whether this prohibition is appropriate and whether there are other activities that should be expressly prohibited.
• Deposit Insurance Clarity.  One of the most practically significant features of the FDIC Proposal is its amendment of 12 C.F.R. Part 330 to address two deposit insurance questions that have been percolating.  First, the proposed amendments would provide that deposits held as reserves backing a payment stablecoin would be insured to the PPSI under the FDIC’s coverage rules for corporate deposits but would not be insured to payment stablecoin holders on a pass-through basis.  Second, the FDIC Proposal would clarify that the application of deposit insurance to deposits does not depend upon the technology or recordkeeping used to record an IDI’s deposit liabilities, confirming that tokenized deposits satisfying the Federal Deposit Insurance Act’s statutory definition of “deposit” would be treated no differently than other deposits.
• Reserves, Liquidity, and Redemptions.  Both the FDIC and OCC Proposals would require 1:1 identifiable and segregated reserves, limited to highly liquid assets and subject to public monthly disclosure, third-party assurance, and CEO/CFO certification, with similar redemption requirements.  Eligible reserve assets include U.S. currency and coin, Federal Reserve Bank balances, FDIC-insured deposits, short-term U.S. Treasury securities, and certain overnight repurchase agreements.  PPSIs would generally be required to redeem payment stablecoins within two business days of a customer request.  While both proposals include a 40% single-institution concentration limit on reserve assets, the FDIC Proposal would impose that limit as an express mandatory requirement applied across all stablecoin brands issued by a single PPSI, whereas under the OCC Proposal the same 40% limit would function as either the threshold for qualifying for an optional quantitative safe harbor or a mandatory requirement for all PPSIs.  The FDIC Proposal would require brand-level segregation of reserves, with strict conditions on sharing “excess” reserves across different stablecoin brands issued by a single PPSI; in contrast, the OCC Proposal would not include the same requirements, though the agency is seeking comment on whether to restrict each PPSI to issuing only a single stablecoin brand altogether.
• Capital, Operational Backstop, and Deconsolidation.  The FDIC Proposal would establish a principles-based capital regime that includes a $5 million minimum capital floor applicable during the de novo period, which is generally the first three years of a PPSI’s operation, with a separate, individualized minimum capital requirement calibrated to each PPSI’s business model and risk profile applying thereafter.  In addition, each PPSI would be required to maintain a separate “operational backstop” of highly liquid assets equal to at least 12 months of operating expenses, distinct from the 1:1 reserve pool. As with the OCC Proposal, the FDIC Proposal would implement the GENIUS Act’s deconsolidation mandate as applicable to its supervised entities, would require that PPSI capital consist solely of common equity tier 1 (“CET1”) and Additional Tier 1 instruments, and would require parent IDIs to deconsolidate PPSI subsidiaries for regulatory capital purposes.

Key features of the FDIC Proposal regarding FDIC-supervised Custodians include:

• Scope.  The FDIC Proposal would apply to FDIC-supervised organizations that provide custodial or safekeeping services relating to payment stablecoins—including services with respect to payment stablecoin reserves, payment stablecoins used as collateral, or the private keys used to issue payment stablecoins—as well as PPSIs that provide such services.
• Customer Property and Creditor Protection.  FDIC-supervised Custodians would be required to treat customer assets, including reserves, stablecoins held as collateral, private keys, cash, and other property held on behalf of a customer, as the customer’s property, rather than the custodian’s.  Under the FDIC Proposal, FDIC-supervised Custodians also would be expected to take “appropriate steps” to protect the customer’s assets from claims of the creditors of the FDIC-supervised Custodian and any sub-custodians through compliance measures commensurate with the FDIC-supervised Custodian’s size, complexity, and risk profile, as well as with the nature of the applicable assets.
• Possession, Control, and Use of Sub‑custodians.  The FDIC Proposal would require that FDIC-supervised Custodians maintain “possession or control” of customer assets, including digital wallets where they control the private keys.  FDIC-supervised Custodians would be permitted to make use of sub-custodians, provided the Custodian maintains “adequate safeguards and internal controls reasonably designed to provide” the Custodian with the ability to oversee the sub-custodian’s compliance with the rulemaking.  For payment stablecoins and tokenized reserve assets specifically, a FDIC-supervised Custodian (or sub-custodian) would be treated as having control only if it can demonstrate both that no other party, including the customer or any affiliate of the Custodian (or sub-custodian), would be able to control or transfer the stablecoin or reserve in the form of an asset in tokenized form using a distributed ledger, without requiring the Custodian’s (or sub-custodian’s, as applicable) affirmative consent to do so.  The FDIC Proposal would also require that an FDIC-supervised Custodian have in place technical safeguards to prevent unauthorized internal access.  An FDIC-supervised Custodian also would be required to have implemented technical safeguards against unauthorized access by its own personnel as well.
• Commingling and Omnibus Accounts.  The FDIC Proposal generally would prohibit commingling customer payment stablecoin reserves, payment stablecoins, cash, and other property with the FDIC-supervised Custodian’s own assets, subject to certain limited exceptions.

The FDIC Proposal was published in the Federal Register on April 10, 2026.  Comments are due June 9, 2026. 

What’s Next?

The GENIUS Act rulemaking process has advanced rapidly, with the OCC, FDIC, National Credit Union Administration, Treasury, and FinCEN all having issued proposed rules implementing key provisions of the statute.  Of the federal banking agencies, only the FRB has yet to propose implementing prudential regulations for PPSIs under its supervision.  With the July 18, 2026 statutory deadline for regulations to be promulgated fast approaching, the agencies are under significant pressure to complete notice-and-comment rulemaking and finalize a coordinated framework, all within a compressed and shrinking timeframe.  While it is not uncommon for agencies to miss statutory rulemaking deadlines of this kind, the pace of activity to date suggests the agencies are working to adhere as closely as possible to the July 18 deadline.

Over the coming months, industry participants and other interested parties should consider the extent to which they want to participate in the comment process and continue to track how closely the forthcoming FRB rulemaking aligns with the OCC and FDIC Proposals.  Even more critically, any financial institution considering payment stablecoin-related activity should be ready to move quickly.  Once the GENIUS Act framework is finalized, the adoption of blockchain-based payment systems is likely to occur rapidly, with significant implications for the competitive landscape.

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We will continue to closely monitor and provide updates on developments in this space.