FDIC approves proposal to establish GENIUS Act application procedures for FDIC-supervised institutions seeking to issue payment stablecoins

On December 16, 2025, the Federal Deposit Insurance Corporation (FDIC) approved a notice of Proposed Rulemaking (Proposed Rule) that upon adoption will implement the federal statutory framework for applications for issuance of payment stablecoins and related activities by subsidiaries of FDIC-supervised institutions for which the FDIC is the primary federal payment stablecoin regulator.¹

Under the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act),² subject to certain limited exceptions, only a permitted payment stablecoin issuer (PPSI) may issue a payment stablecoin in the US.³ PPSIs include a person formed in the US that is a subsidiary of an insured depository institution (IDI) that has been approved to issue payment stablecoins by its “primary federal stablecoin regulator.”⁴

An FDIC-supervised institution that wishes to issue payment stablecoins is required to apply to the FDIC for the subsidiary to be approved as a PPSI. FDIC-supervised institutions comprise state-chartered insured banks that are not members of the Federal Reserve System and state-chartered savings associations. The application process for other IDIs, federal qualified payment stablecoin issuers, and insured credit unions will be the subject of separate rulemaking proposals by the other primary federal stablecoin regulators under the GENIUS Act (the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the National Credit Union Administration).

Section I of this alert summarizes the information that an applicant must provide to the FDIC pursuant to the Proposed Rule. Section II describes the timeline required for the FDIC’s decision on the application. Section III summarizes the criteria that the FDIC will use to evaluate an application.

Comments on the Proposed Rule are due no later than February 17, 2026.

I. Contents of PPSI Application to FDIC

According to the Proposed Rule, the application, which would take the form of a letter application, would be required to include the following:

• a “description of the proposed payment stablecoin and proposed activities of the subsidiary of the applicant, including related activities of the applicant, how the subsidiary plans to maintain the proposed payment stablecoin’s stable value or the reasonable expectation thereof, and any proposed activities incidental to payment stablecoin activities or digital asset service provider activities,”⁵
• “[r]elevant financial information for the subsidiary, including planned capital and liquidity structure; reserve assets and composition and associated asset management plan; and financial projections for the first three years of operations,”⁶
• a “description of the subsidiary’s ownership and control structure; organizing documents; and a list of the subsidiary’s proposed directors, officers, and principal shareholders (if different from the applicant), including a statement as to whether any of the proposed directors and officers have been convicted of a felony offense involving insider trading, embezzlement, cybercrime, money laundering, financing of terrorism, or financial fraud,”⁷
• relevant policies and procedures and customer agreements, including for custody and safekeeping; segregating customer and reserve assets; recordkeeping; reconciliation and transaction processing; redemption; and Bank Secrecy Act/anti-money laundering/countering the financing of terrorism and economic sanctions requirements⁸ and
• an engagement letter with a registered public accounting firm.⁹

The Proposed Rule clarifies that if a payment stablecoin is proposed to be backed or offered by multiple banks through a consortium structured as a subsidiary of an FDIC-supervised institution, “the FDIC would expect the application to include the governance structure of such arrangement, including expected activities of the other members of the consortium.”¹⁰

II. Timeline for Decision; Appeal

According to the Proposed Rule, “the FDIC would notify an applicant as to whether the application is considered substantially complete not later than 30 days after the FDIC receives an application. At that time, if the application is not considered substantially complete, the FDIC is required to specify the additional information the applicant is required to provide.”¹¹ 

“The FDIC is required to approve or deny an application not later than 120 days after receiving a substantially complete application.”¹²

The FDIC may impose conditions upon approving an application, including the standard conditions set out under 12 CFR §303.2(bb), provided that the FDIC does not impose requirements in addition to the requirements of section 4 of the GENIUS Act.¹³

Not later than 30 days after the date of receipt of a denial of an application, the applicant may request a hearing pursuant to the FDIC’s process for appealing material supervisory determinations.¹⁴

III. Evaluation Criteria

The GENIUS Act requires that the FDIC evaluate a substantially complete application using the factors specified in Section 5(c) of the GENIUS Act.¹⁵ The GENIUS Act provides that the FDIC shall deny an application only upon determining that the activities of the applicant would be unsafe or unsound based on factors described in section 5(c) of the GENIUS Act.¹⁶ Consistent with that statutory requirement, the Proposed Rule contemplates that “the FDIC shall deny a substantially complete application if the activities of the applicant would be unsafe or unsound based on the factors described in section 5(c) of the GENIUS Act.”¹⁷

First, when evaluating an application, the FDIC is required by Section 5(c)(i) to consider the ability of the IDI’s subsidiary, based on financial condition and resources, to meet the requirements for issuing payment stablecoins set forth in section 4 of the GENIUS Act.¹⁸ “Section 4 requires that a PPSI maintain identifiable reserves backing the outstanding payment stablecoins on at least a 1 to 1 basis, comprised of specified categories of reserves, and the ability to meet the monthly reserve disclosure requirements applicable to a PPSI.”¹⁹ A PPSI must disclose the composition of the PPSI’s reserves on its website and submit to the FDIC “certified reports examined by a public accounting firm regarding the prior month’s reserve composition disclosure.”²⁰

The FDIC is also required to consider the ability of the IDI’s subsidiary, based on its financial condition and resources, to comply with regulations regarding capital requirements; liquidity requirements; reserve asset diversification; and operational, compliance, and information technology risk management principles-based requirements and standards, including Bank Secrecy Act and sanctions compliance standards.²¹ Those regulations have not yet been issued for public comment by the FDIC.

Section 4 also generally only permits PPSIs to issue and redeem payment stablecoins, manage related reserves, and provide certain payment stablecoin custodial or safekeeping services for payment stablecoins, required reserves or private keys (collectively, “specified activities”); undertake other activities that directly support the specified activities;²² and engage in digital asset service provider activities.²³

Second, the FDIC is required to consider factors related to management, i.e., (i) whether an officer or director is an individual who has been convicted of a felony offense involving insider trading, embezzlement, cybercrime, money laundering, financing of terrorism, or financial fraud is serving as an officer or director of the applicant; and (ii) the competence, experience, and integrity of the officers, directors, and principal shareholders of the applicant, its subsidiaries, and parent.²⁴

Third, the FDIC is also required to consider whether the PPSI’s redemption policy meets the standards required by the GENIUS Act, which (i) requires that the redemption policy establish clear and conspicuous procedures for timely redemption of outstanding payment stablecoins and publicly, clearly, and conspicuously disclose in plain language all fees associated with purchasing or redeeming the 8payment stablecoins and (ii) prohibits such fees from being changed without at least seven days’ prior notice to consumers.²⁵ 

Section 5(c)(5) of the GENIUS Act contemplates that in evaluating an application, the FDIC may use, in addition to the other factors specified in Section 5(c) of the GENIUS Act, any factors “that are necessary to ensure the safety and soundness of the [PPSI].”²⁶We note, however, that, under the Proposed Rule, the FDIC does not propose at this time to establish any additional factors “[g]iven that the applicant would be an FDIC-supervised institution, known to the appropriate region.”²⁷ The FDIC inquires in its request for comments whether the FDIC should consider additional factors and why the additional factors “would be necessary to consider whether the activities of the applicant would potentially be unsafe or unsound.”²⁸

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

_{1 FDIC Approves Proposal to Establish GENIUS Act Application Procedures for FDIC-Supervised Institutions Seeking to Issue Payment Stablecoins | FDIC.gov; see 90 Fed. Reg. 59409 (December 19, 2025).}

_{2 12 U.S.C. §5901 et seq.}

_{3 12 U.S.C. §5902.}

_{4 12 U.S.C. §5901(25).}

_{5 Proposed 12 CFR §303.252(d)(1); 90 Fed. Reg. 59417 (December 19, 2025).}

_{6 Proposed 12 §CFR 303.252(d)(2); 90 Fed. Reg. 59417 (December 19, 2025). The FDIC indicated that it expected that such financial information will demonstrate consistency with the regulations that will be issued to implement the standards required by section 4 of the GENIUS Act (see 90 Fed. Reg. 59412 (December 19, 2025)). Those regulations have not yet been issued for public comment by the FDIC.}

_{7 Proposed 12 CFR §303.252(d)(3).}

_{8 Proposed 12 CFR §303.252(d)(4).}

_{9 Proposed 12 CFR §303.252(d)(5).}

_{10 90 Fed. Reg. 59412 (December 19, 2025).}

_{11 Proposed 12 CFR §303.252(f).}

_{12 Proposed 12 CFR §303.252(g).}

_{13 Proposed 12 CFR §303.252(g)(2).}

_{14 Proposed 12 CFR §303.252(h).}

_{15 See 12 U.S.C. §5904(b).}

_{16 12 U.S.C. §5904(d)(2)(A)(i).}

_{17 Proposed 12 CFR §303.252(g)(3).}

_{18 12 U.S.C. §5904(c)(i).}

_{19 90 Fed. Reg. 59410 (December 19, 2025) (citation omitted).}

_{20 90 Fed. Reg. 59410 (December 19, 2025) (citations omitted).}

_{21 90 Fed. Reg. 59410 (December 19, 2025).}

_{22 See 12 U.S.C. §5903(a)(7)(A).}

_{23 See 12 U.S.C. §5903(a)(7)(B).}

_{24 90 Fed. Reg. §59411 (December 19, 2025).}

_{25 12 U.S.C. §5903(a)(1)(B).}

_{26 12 U.S.C. §5904(c)(5).}

_{27 90 Fed. Reg. 59411 (December 19, 2025).}

_{28 90 Fed. Reg. 59416 (December 19, 2025) (Question 4).}