Federal Deposit Insurance Corporation proposes GENIUS Act application procedures for FDIC-supervised institutions issuing payment stablecoins through subsidiaries

The Federal Deposit Insurance Corporation Board considered a proposed rule that would set out how FDIC-supervised insured depository institutions would apply to issue payment stablecoins through a subsidiary under the GENIUS Act. The proposal would create a tailored application process to assess the safety and soundness of the proposed activities against the statutory factors while seeking to minimize regulatory burden. The framework implements Section 5 of the GENIUS Act, which requires an insured depository institution to obtain approval from its primary Federal payment stablecoin regulator before issuing payment stablecoins via a subsidiary. For this purpose, the FDIC is the primary Federal payment stablecoin regulator for subsidiaries of certain state-chartered insured banks and state-chartered savings associations it supervises; once approved, the subsidiary becomes a permitted payment stablecoin issuer and is limited to activities such as issuing and redeeming payment stablecoins, managing related reserves, and providing custody or safekeeping services for stablecoins, required reserves, or private keys, plus directly supporting activities consistent with State and Federal law. The agency described the proposal as its first step in implementing the GENIUS Act and indicated it expects, in the months ahead, to propose separate rules on the statutorily mandated capital, liquidity, and risk management requirements for approved subsidiaries, alongside other GENIUS Act-related workstreams.