Banks Face New Pathway for Stablecoin Issuance Under Federal Framework

U.S. banks are now positioned to pursue payment stablecoin programs following the Federal Deposit Insurance Corporation’s announcement of a comprehensive approval framework. This regulatory development represents a significant milestone in implementing the GENIUS Act, legislation enacted earlier this year that establishes federal oversight for stablecoin issuance.

How the FDIC’s New Framework Functions

The FDIC board released proposed rulemaking details specifying the process through which banks can apply to issue stablecoins via subsidiaries. Financial institutions supervised by the FDIC must submit formal applications detailing their stablecoin operational mechanics, reserve structures, and governance models.

The regulator’s evaluation will prioritize several critical dimensions: financial safety, operational soundness, governance architecture, and risk management protocols. Only after satisfying these criteria will approval be granted. The framework directly incorporates principles from the GENIUS Act, establishing federal standards for payment stablecoin regulation and requiring stablecoins to maintain full backing through fiat currency or highly liquid assets.

Travis Hill, Acting FDIC Chair, characterized the agency’s approach as calibrated and accommodating. He emphasized that risk assessment will proceed without imposing unnecessary compliance burdens on applicants.

Application Requirements and Bank Obligations

Banks seeking stablecoin authorization must provide detailed documentation across multiple dimensions. Applicants must articulate clear ownership structures, operational procedures, and reserve management protocols. Engagement letters from registered accounting firms are mandatory components of any submission.

The regulatory framework anticipates that leading financial institutions will leverage stablecoin capabilities—major banks are already piloting applications with cryptocurrency partners for payment settlement purposes. The FDIC will evaluate whether proposed stablecoin activities present systemic financial risks before rendering approval decisions.

A notable provision within the framework involves automatic authorization: if regulators fail to respond within specified timeframes, applications may receive automatic approval status.

Ongoing Supervision and Compliance Obligations

Once approved, stablecoin issuers will operate under prescribed standards governing capital adequacy, liquidity requirements, and risk management frameworks. Additionally, all approved faze banks must maintain full compliance with anti-money-laundering regulations and sanctions enforcement protocols.

This regulatory pathway marks the first concrete implementation of legislative authority granted through the GENIUS Act, potentially unlocking widespread stablecoin adoption within the traditional banking sector.