The Federal Deposit Insurance Corporation (FDIC) has taken a significant step in the federal oversight of dollar-pegged digital assets by advancing a new regulatory framework for stablecoins. This framework begins to define how U.S. banks and their subsidiaries may issue and manage stablecoins under the provisions of the Guiding and Establishing National Innovation for U.S. Stablecoins Act, formally known as the GENIUS Act.

In a proposed rule approved on April 7, the FDIC outlined detailed requirements for entities designated as “permitted payment stablecoin issuers” (PPSIs). These issuers are envisioned to operate as subsidiaries of institutions supervised by the FDIC. The comprehensive framework encompasses critical areas such as reserves, redemption practices, capital adequacy, liquidity management, cybersecurity protocols, and robust risk management strategies. This proposal is now open to a 60-day public comment period, inviting input from stakeholders before its final adoption.

A central pillar of the FDIC’s framework is the strict requirement for PPSIs to maintain full backing of their stablecoins on a 1:1 basis with eligible reserve assets. These reserves must be diligently monitored daily and held entirely separate from any other business activities of the issuer. The FDIC has specified that eligible reserve assets include highly liquid and low-risk instruments such as U.S. currency, balances maintained at Federal Reserve Banks, insured bank deposits, short-term U.S. Treasury securities, and certain overnight repurchase agreements. To further ensure stability and mitigate risk, the proposal also establishes concentration limits on reserve holdings and imposes restrictions on exposure to various counterparties, guaranteeing redemption capacity even during periods of market stress.

Redemption standards are another core component designed to instill confidence in stablecoin holders. Issuers would be mandated to publish clear and transparent redemption policies. Generally, redemption requests must be processed within two business days. To address potential systemic risks, the framework includes a provision requiring issuers to notify regulators in cases where large withdrawals exceed 10% of outstanding stablecoin issuance within a 24-hour period, with the possibility for issuers to request extensions under such circumstances.

Addressing financial stability concerns and operational risks associated with expanding stablecoin usage in payments infrastructure, FDIC Chair Travis Hill highlighted the framework's intent. The proposal introduces specific capital requirements for PPSIs. New issuers would be obligated to hold a minimum of $5 million in capital for their initial three years of operation, with the potential for additional requirements based on supervisory assessment. Moving forward, ongoing capital must primarily consist of common equity tier 1 and additional tier 1 instruments. Furthermore, PPSIs would need to maintain a separate liquidity buffer, distinct from the reserve requirements for issued stablecoins, equivalent to 12 months of operating expenses.

Operational resilience and cybersecurity are also thoroughly addressed. The rule mandates that issuers establish and maintain robust systems covering essential functions such as private-key management, continuous blockchain monitoring, effective incident response plans, and regular independent audits. Additionally, annual compliance certifications related to anti-money laundering (AML) and counter-terrorist financing (CTF) programs are required, ensuring adherence to financial crime prevention standards.

Crucially, the FDIC clarified that stablecoins issued under this new framework would not receive the standard deposit insurance protections typically afforded to bank deposits, which are capped at $250,000. While reserves held by the issuer at insured institutions would be treated as corporate deposits of the issuer, they would not extend individual deposit insurance coverage to stablecoin holders. However, the proposal does specify that "tokenized deposits" that legally meet the definition of a bank deposit would receive standard deposit insurance treatment, irrespective of the technological format used.

The FDIC's initiative aligns with earlier implementation efforts linked to the GENIUS Act and runs in parallel with rulemaking activities from other federal banking regulators, including the Office of the Comptroller of the Currency. With a statutory deadline for implementation set for mid-2026, regulators are under pressure to finalize a unified stablecoin framework in the coming months. The current proposal is anticipated to undergo revisions following the public comment process before its ultimate adoption.