On April 7, 2026, the Board of the Federal Deposit Insurance Corporation (FDIC) approved a proposed rule establishing a comprehensive prudential framework for the issuance of payment stablecoins by FDIC-supervised banks and their subsidiaries. Following the draft application procedures released in December 2025, this is the second supporting rule introduced by the FDIC under the GENIUS Act framework. It marks the transition of US stablecoin regulation from its "constitutional moment" to a new "enforcement era." Meanwhile, on April 3, the Treasury Department issued guiding principles for the dual-track state and federal regulatory approach. Combined with the OCC’s comprehensive regulatory proposal released in February, the top-level design of US stablecoin oversight has largely taken shape.
Who Is Eligible to Issue Bank-Affiliated Stablecoins?
The FDIC proposal specifies that only FDIC-supervised insured depository institutions (IDIs), through their established "Qualified Payment Stablecoin Issuer" (PPSI) subsidiaries, are eligible to issue payment stablecoins under the FDIC framework. The proposal applies to FDIC-supervised state non-member banks and state savings associations. In December 2025, the FDIC released rules for the application process, detailing how banks should submit issuance applications and the required documentation. The current proposal further supplements these by outlining substantive operational requirements post-approval, including standards for reserves, redemption, capital, liquidity, risk management, and disclosures. Banks establishing a PPSI must continue to uphold their own prudential operational standards; the independent operations of the PPSI must not weaken the parent company’s capital, liquidity, or risk management.
How Are 1:1 Reserves and T+2 Redemption Enforced?
The proposal requires that PPSIs fully back all circulating stablecoins with high-quality liquid assets—such as cash or US Treasuries—at a minimum 1:1 ratio. The value of reserve assets must never fall below the total face value of outstanding, unredeemed stablecoins at any time. Reserves must be held in segregated accounts, valued daily, and remain fully identifiable. If a single PPSI issues multiple stablecoin brands, each brand must, in principle, have its own segregated and traceable reserve pool; commingling is not permitted. For redemptions, the PPSI must process the majority of redemption requests within two business days (T+2). However, if withdrawals exceed 10% of outstanding stablecoins in a single day, the PPSI must notify regulators.
Core Financial Constraints for Bank-Affiliated Stablecoins
The proposal sets clear financial thresholds for bank-affiliated stablecoins. New PPSIs must maintain a minimum capital of $5 million during their first three years of operation. Additionally, PPSIs are required to hold a liquidity buffer sufficient to cover 12 months of projected operating expenses. The proposal explicitly prohibits the payment of any form of interest or yield to stablecoin holders. PPSI reserve assets cannot be used for lending, rehypothecation, or other high-risk activities, nor can they be commingled with the bank’s own funds. Stablecoins must focus strictly on payment and settlement functions, not serve as yield-generating instruments.
Deposit Insurance: Where Protection Applies and Where It Doesn’t
The FDIC proposal clarifies that bank deposits held as stablecoin reserves are treated as corporate deposits and do not qualify for pass-through deposit insurance coverage for individuals. FDIC Chairman Travis Hill has previously stated that payment stablecoin holders are not eligible for FDIC deposit insurance, and issuers are prohibited from claiming FDIC protection in their marketing. At the same time, the FDIC has updated its regulations to specify that eligible tokenized deposits receive the same treatment as comparable traditional deposits under the Federal Deposit Insurance Act. The key distinction: while reserve assets in bank accounts are protected by deposit insurance at the account level, this protection does not extend to end stablecoin holders.
AML and Sanctions Compliance as Mandatory Obligations
On April 8, 2026, the Treasury Department, together with FinCEN and OFAC, released a proposed rule formally designating PPSIs as "financial institutions" under the Bank Secrecy Act. PPSIs must implement comprehensive Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) programs, and have technical capabilities to intercept, freeze, and reject specific transactions. Each PPSI must appoint a dedicated compliance officer residing in the US to oversee AML/CFT systems; this individual must have no criminal record related to insider trading, cybercrime, or financial fraud. The FDIC proposal also requires PPSIs to establish robust governance structures, cybersecurity defenses, and board-level oversight. Monthly reserve reports are mandatory, and issuers with more than $5 billion in outstanding stablecoins must undergo annual comprehensive audits.
How State and Federal Oversight Are Divided
The Treasury Department’s proposal released on April 3, 2026, establishes the core framework for dual-track state and federal regulation. Stablecoin issuers with total outstanding issuance not exceeding $1 billion may opt for state-level oversight, provided the state’s regulatory framework is "substantially similar" to federal standards. The Treasury’s criteria require that state frameworks "meet or exceed" federal requirements in key areas such as reserves, AML compliance, and consumer protection. Once issuance surpasses $1 billion, regulatory authority automatically shifts to the federal level. This means the dual-track system is not two parallel, independent paths, but rather a tiered structure: smaller players may operate under qualifying state regimes, but must transition to federal oversight as their scale grows.
What Dual-Track Regulation Means for the Industry
With the rollout of the FDIC proposal, the OCC’s proposal, and the Treasury’s dual-track framework, stablecoin issuance has moved from a regulatory gray area into a formalized "bank-like" system. Large issuers, whether choosing the federal or state route, will face strict capital requirements and disclosure obligations. The entry bar for bank-affiliated issuers is clearly defined, while non-bank issuers fall under OCC jurisdiction. In January 2026, monthly stablecoin transfer volumes reached $10.5 trillion—comparable to Mastercard’s annual fiat processing volume. At this scale, the establishment of clear regulatory rules will directly impact the competitive landscape of future payment infrastructure. Once the rules are finalized, differences in compliance costs will become a key factor for issuers when choosing their regulatory path.
Summary
The FDIC’s stablecoin proposal establishes a comprehensive prudential regulatory framework for bank-affiliated stablecoin issuance across six dimensions: reserves, redemption, capital, liquidity, risk management, and disclosure. The core requirements can be summarized as "1:1 reserves + T+2 redemption + $5 million minimum capital + zero interest + no pass-through deposit insurance." Running in parallel is the Treasury’s state-federal dual-track system: issuers with less than $1 billion in outstanding stablecoins may opt for state-level oversight, while those exceeding this threshold are automatically subject to federal regulation. As of April 13, 2026, the FDIC proposal has entered a 60-day public comment period. The final rule is expected to be adopted within 2026 and take full effect in 2027. For stablecoin issuers, the choice of regulatory path will depend on their scale, compliance capabilities, and business strategy alignment.
FAQ
Q: Does the FDIC proposal mean stablecoin holders are eligible for deposit insurance?
A: No. The FDIC clearly states that payment stablecoin reserves are treated as corporate deposits and do not qualify for individual pass-through deposit insurance. Issuers are also prohibited from claiming FDIC protection in their marketing.
Q: Is the $5 million minimum capital requirement mandatory for all stablecoin issuers?
A: This requirement applies to newly established bank-affiliated PPSI subsidiaries under the FDIC regulatory framework, and must be met during their first three years of operation. Non-bank issuers (such as federally licensed non-bank issuers under OCC oversight) are subject to different capital standards.
Q: Will stablecoins with more than $1 billion in outstanding issuance automatically come under federal oversight?
A: Yes. Under the Treasury’s dual-track framework, once outstanding issuance exceeds $1 billion, regulatory authority automatically shifts from the state to the federal level.
Q: When does the dual-track regulatory regime officially take effect?
A: The FDIC proposal is currently in a 60-day public comment period (through early June 2026). The final rule is expected to be adopted within 2026. The GENIUS Act will take full effect on January 18, 2027, or 120 days after the final implementing rule is published, whichever comes first.
