FDIC Unveils Proposal for Bank Stablecoin Issuers: 1:1 Reserves, Two-Day Redemptions
The Federal Deposit Insurance Corporation (FDIC) on Tuesday approved a notice of proposed rulemaking that would set reserve, redemption, capital and risk-management standards for bank-affiliated stablecoin issuers operating under the GENIUS Act.
The proposal, approved April 7, 2026, applies to "permitted payment stablecoin issuers" (PPSIs), typically subsidiaries of FDIC-supervised insured depository institutions such as state nonmember banks and state savings associations. The GENIUS Act (12 U.S.C. 5901–5916) bars non-permitted entities from issuing payment stablecoins in the United States and directs federal banking agencies to finalize implementing rules by July 18, 2026.
Under the draft rule, PPSIs would be required to maintain eligible reserves equal to outstanding stablecoins on a 1:1 basis at all times. The fair value or face value of reserves must meet or exceed the consolidated par value of coins in circulation, with reserves monitored daily and segregated from other issuer assets.
Eligible reserve assets would be limited to low-risk, highly liquid instruments: U.S. coins and currency; balances at Federal Reserve Banks; demand deposits at insured depository institutions; U.S. Treasury securities with a remaining maturity of 93 days or less; overnight repurchase agreements; overnight reverse repurchase agreements overcollateralized by eligible Treasuries; and shares of money market funds invested exclusively in those instruments. Counterparty exposure would be capped at 40% of total reserves, and issuers would need to demonstrate they can rapidly access and convert reserves to cash.
On redemptions, PPSIs would have to publicly disclose a redemption policy and generally satisfy requests within two business days. If redemptions exceed 10% of outstanding issuance value in any 24-hour period, the issuer must notify the FDIC and may seek an extension at the agency's discretion.
Capital standards would be principles-based. New PPSIs would face a $5 million minimum capital requirement for their first three years, unless regulators require more. Ongoing capital would be limited to common equity tier 1 and additional tier 1 instruments, with no Tier 2 capital permitted. Parent banks would be required to deconsolidate PPSI subsidiaries for regulatory capital purposes.
Separately from the 1:1 reserve pool, PPSIs would also need to maintain a dedicated pool of highly liquid assets equal to 12 months of total operating expenses. Falling short of capital or liquidity requirements would trigger mandatory FDIC notification and could lead to a suspension of new issuance.
The proposal includes explicit cybersecurity requirements, calling for a comprehensive IT framework covering smart-contract controls, private-key management, blockchain monitoring, incident response and independent testing. PPSIs would also be required to provide annual AML/CFT program certifications.
On deposit insurance, the FDIC said deposits held by insured banks as PPSI reserves would be insured only as corporate deposits of the PPSI, up to the standard $250,000 limit. Pass-through coverage to individual stablecoin holders would not apply, aligning with the GENIUS Act's prohibition on deposit insurance for stablecoins.
The rule also addresses tokenized deposits. If a tokenized liability meets the Federal Deposit Insurance Act definition of "deposit" under 12 U.S.C. 1813(l), it would receive the same insurance treatment as a traditional deposit, regardless of the technology used.
This would mark the FDIC's second GENIUS Act rulemaking. The agency's first proposed rule, issued Dec. 19, 2025, set application procedures for banks seeking PPSI approval through a subsidiary; the comment period for that proposal was extended to May 18, 2026.
For the new proposal, the FDIC will take public comments for 60 days after publication in the Federal Register. The agency is seeking feedback on reserve buffers, additional eligible asset types, concentration limits, bankruptcy-remote structures and the treatment of uninsured deposits. The 60-day comment window closes ahead of the GENIUS Act's July 18, 2026 regulatory deadline.
The GENIUS Act takes general effect no later than Jan. 18, 2027, or 120 days after federal agencies finalize their regulations, whichever comes first.
