The US Federal Deposit Insurance Corporation (FDIC) has approved a sweeping proposed rule that sets reserve, capital, redemption, and risk management standards for bank-affiliated stablecoin issuers, marking the second major step in translating the GENIUS Act from law into enforceable regulation.
What the FDIC just approved
On April 7, 2026, the FDIC Board of Directors voted to issue a notice of proposed rulemaking (NPRM) targeting permitted payment stablecoin issuers (PPSIs), entities authorized to issue dollar-backed stablecoins as subsidiaries of FDIC-supervised banks. The proposal builds a full prudential framework covering reserve holdings, token redemption, capital adequacy, and custody standards.
Under the proposed rules, stablecoin issuers must back every token at a 1:1 ratio with eligible reserve assets. Such assets must be held separate from any other business activity and monitored daily. All such eligible instruments include, but are not limited to, US currency, balances of Federal Reserve Banks, fully-insured deposits at banks, short-term US Treasury securities, and a number of overnight repurchase agreements. There are also concentration limits and counterparty exposure restrictions.
When redemption happens, clear redemption policy must be published by issuers. The request generally must be fulfilled within two business days. When the redemptions exceed 10% of the outstanding issuance in a 24-hour period, the issuer has to notify the FDIC, and the issuer may seek an extension at the agency’s discretion.
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Capital requirements and the $5 million floor
The proposal introduces a $5 million minimum capital requirement for new PPSIs during their first three years of operation, or higher if regulators determine it is necessary. Ongoing capital must consist of common equity tier 1 and additional tier 1 instruments exclusively, Tier 2 capital is not permitted.
Beyond the 1:1 reserve pool, issuers must maintain a separate liquidity buffer equal to 12 months of total operating expenses. The FDIC describes this as an operational backstop to keep the business viable under stress. Parent banks must also deconsolidate their PPSI subsidiary when calculating their own regulatory capital.
Stablecoin holders will not receive deposit insurance
One of the most closely watched questions heading into this rulemaking was whether stablecoin holders would benefit from FDIC protection. The answer is no.
Reserve deposits backing a payment stablecoin will be treated as corporate deposits of the issuer, insured up to the standard $250,000 limit, but that protection will not flow through to individual token holders. The FDIC argued that extending pass-through insurance to users would conflict with the GENIUS Act’s explicit prohibition on representing payment stablecoins as federally insured.
That said, the FDIC maintained that its framework still creates a more secure environment for users by subjecting issuers to elevated regulatory and supervisory standards, including mandatory 1:1 reserves and redemption guarantees.
Tokenized deposits get regulatory clarity
The proposal also resolves a question circulating among banks and fintech firms: how should tokenized deposits be treated? The FDIC’s answer is straightforward: a tokenized deposit is still a deposit. If a tokenized liability meets the statutory definition of a deposit under the Federal Deposit Insurance Act, it will receive the same insurance treatment as any traditional deposit, regardless of the underlying technology or recordkeeping system.
This distinction matters because the past year has seen regulators draw a firmer line between bank-issued tokenized deposits and payment stablecoins issued under the GENIUS Act. The two products now sit in clearly separate regulatory buckets.
A second proposal in a race against the July 2026 deadline
This is the FDIC’s second GENIUS Act rulemaking. The first, approved on December 19, 2025, established the application procedures for banks seeking approval to issue stablecoins through subsidiaries. Tuesday’s proposal moves to the operating standards those approved issuers would need to follow.
The FDIC’s action closely mirrors a framework the Office of the Comptroller of the Currency (OCC) proposed in February 2026. The OCC covers a broader scope, including national bank subsidiaries and certain nonbank issuers, while the FDIC focuses on state-chartered nonmember banks and savings associations. Both agencies are working toward the GENIUS Act’s statutory deadline of July 18, 2026.
The Treasury Department is simultaneously developing evaluation criteria for state-level stablecoin regimes, with its comment period running through June 2, 2026. Under the GENIUS Act, stablecoin issuers with less than $10 billion in outstanding tokens may opt for state-level regulation if their state’s framework meets federal standards.
The yield debate and broader legislative tensions
The FDIC’s rulemaking lands in the middle of a live political fight. Senate lawmakers are still debating whether to permit yield-bearing stablecoins under the separate Digital Asset Market Clarity Act, a clash pitting the banking industry, which fears deposit runoff, against crypto firms eager to offer returns on stablecoin balances. Analysts at Jefferies have warned that stablecoin growth could drive a 3–5% decline in core bank deposits over the next five years.
For now, the FDIC’s proposed rule prohibits issuers from paying yield or representing that stablecoins bear interest. The agency has invited public feedback on 144 specific questions, covering permissible and prohibited activities, capital treatment, pass-through insurance, and the yield prohibition, with the 60-day comment window opening upon Federal Register publication.
What this means for the stablecoin market
By doing this, the bankers’ bank has created an on-ramp that regulators supervise for the issuance of dollar-pegged tokens. Now any FDIC-insured state bank or savings association may apply to be a PPSI and bank-issued stablecoins backed by FDIC-supervised reserves could siphon off a large part of the institutional market in payments, settlement, and cross-border transfers that USDT and USDC now dominate.
The rule sets the compliance hurdle for current issuers to continue trading on US markets when the GENIUS Act comes into effect. Considering the present speed of rulemaking, that date will probably occur in late 2026, not January 18, 2027, as the statute states.
The FDIC supervises more than 2,700 banks and savings associations and insures deposits at over 4,000 financial institutions. Its entry into stablecoin regulation represents the most direct integration yet of digital-asset oversight into the core US banking framework.
