FDIC Proposes GENIUS Act Rules for Bank Stablecoin Issuers: 1:1 Reserves and 2-Day Redemptions Required

Key Takeaways:

• The FDIC approved a projected regularisation connected April 7, 2026, implementing GENIUS Act standards for stablecoin issuers.
• Permitted outgo stablecoin issuers indispensable clasp 1:1 reserves successful eligible assets and redeem wrong 2 concern days.
• The 60-day nationalist remark play closes earlier the GENIUS Act’s July 18, 2026 regulatory deadline.

FDIC Moves connected GENIUS Act Stablecoins

The proposed rule targets permitted outgo stablecoin issuers, oregon PPSIs, which are typically subsidiaries of FDIC-supervised insured depository institutions specified arsenic authorities nonmember banks and authorities savings associations. The GENIUS Act, codified astatine 12 U.S.C. 5901-5916, bars non-permitted entities from issuing outgo stablecoins successful the United States and directs national banking agencies to finalize regulations by July 18, 2026.

Under the proposal, PPSIs indispensable clasp reserves backing outstanding stablecoins connected a 1:1 ground astatine each times. The just worth oregon look worth of those reserves indispensable adjacent oregon transcend the consolidated par worth of outstanding coins. Reserves indispensable beryllium monitored regular and kept abstracted from the issuer’s different assets.

Eligible reserve assets are constricted to low-risk, highly liquid instruments. Those see U.S. coins and currency, balances astatine Federal Reserve Banks, request deposits astatine insured depository institutions, U.S. Treasury securities with a remaining maturity of 93 days oregon less, overnight repurchase agreements, overnight reverse repos overcollateralized by eligible Treasuries, and shares successful wealth marketplace funds invested solely successful those assets.

The connection caps counterparty vulnerability astatine 40% of full reserves. PPSIs indispensable besides show the operational quality to rapidly entree and person reserves to currency if needed.

On redemption, the regularisation requires PPSIs to publically disclose a redemption argumentation and mostly fulfill requests wrong 2 concern days. For ample redemptions exceeding 10% of outstanding issuance worth successful immoderate 24-hour period, a PPSI indispensable notify the FDIC and whitethorn petition an hold astatine the agency’s discretion.

Capital requirements are principles-based. New PPSIs look a $5 cardinal minimum superior requirement, oregon a higher magnitude if conditioned by regulators, for their archetypal 3 years of operation. Ongoing superior indispensable dwell of communal equity tier 1 and further tier 1 instruments, with nary Tier 2 superior permitted. Parent banks indispensable deconsolidate PPSI subsidiaries for regulatory superior purposes.

PPSIs indispensable besides support a abstracted excavation of highly liquid assets adjacent to 12 months of full operating expenses. This operational backstop is chiseled from the 1:1 reserve pool. Failure to conscionable superior oregon liquidity requirements triggers mandatory FDIC notification and imaginable suspension of caller issuance.

The connection addresses cybersecurity directly. PPSIs indispensable support a broad accusation exertion model covering smart contract controls, private-key management, blockchain monitoring, incidental response, and autarkic testing. Annual AML/CFT programme certifications are besides required.

On deposit insurance, the regularisation states that deposits held by insured banks arsenic PPSI reserves are insured lone arsenic firm deposits of the PPSI, up to the modular $250,000 limit. Pass-through sum to idiosyncratic stablecoin holders does not apply. That presumption reflects the GENIUS Act’s prohibition connected deposit security for stablecoins.

The regularisation besides clarifies attraction of tokenized deposits. If a tokenized liability meets the Federal Deposit Insurance Act’s explanation of “deposit” nether 12 U.S.C. 1813(l), it receives the aforesaid security attraction arsenic a accepted deposit, careless of the underlying technology.

This is the FDIC’s 2nd GENIUS Act rulemaking. The bureau issued its archetypal projected regularisation Dec. 19, 2025, establishing exertion procedures for banks seeking PPSI support done a subsidiary. Comments connected that regularisation were extended to May 18, 2026.

The FDIC is accepting nationalist comments connected the caller connection for 60 days pursuing Federal Register publication. The bureau is seeking input connected reserve buffers, further eligible plus types, attraction limits, bankruptcy-remote structures, and the attraction of uninsured deposits.

The GENIUS Act takes wide effect nary aboriginal than Jan. 18, 2027, oregon 120 days aft national agencies finalize their regulations, whichever comes first.