FDIC Proposes Application Procedures for Supervised Entities to Issue Stablecoins Through a Subsidiary

On December 16, 2025, the Federal Deposit Insurance Corporation (FDIC) Board of Directors approved a notice of proposed rulemaking (NPRM or Proposed Rule) implementing provisions of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), allowing insured depository institutions (IDIs) to issue payment stablecoins through a subsidiary.^[1] The NPRM establishes application procedures for an FDIC-supervised IDI to apply for and obtain FDIC approval “to issue payment stablecoins through a subsidiary.”^[2]

GENIUS Act Background

President Trump signed the GENIUS Act to law on July 18, 2025. Section 3(a) of the GENIUS Act limits the issuance of payment stablecoins in the US to permitted payment stablecoin issuers (PPSIs).^[3] There are three pathways for an entity to become a PPSI under the GENIUS Act, the NPRM concerns only one: “a subsidiary of an [IDI] that has been approved to issue payment stablecoins” pursuant to section 5 of the Act.^[4] The primary federal payment stablecoin regulator (primary regulator) of a PPSI that is a subsidiary of an IDI is the same as the appropriate Federal banking agency of the IDI.^[5] As such, the FDIC is the primary regulator of subsidiaries of FDIC-supervised IDIs seeking to issue payment stablecoins.

Under section 5 of the GENIUS Act, the FDIC is required to “receive, review, and consider for approval applications from any insured depository institution that seeks to issue payment stablecoins through a subsidiary” and to “establish a process and framework for the licensing, regulation, examination, and supervision of such entities that prioritizes the safety and soundness of such entities.”^[6]

Application Procedures

The GENIUS Act imposes a number of statutory requirements related to the application procedure. Primary regulators must evaluate applications to issue payment stablecoins using the following statutory factors:

1. The ability of the application, based on financial condition and resources, to meet the Act’s requirements for issuing payment stablecoins;
2. Whether any officer or director of the applicant has been convicted of certain specified felony offenses;
3. The competence, experience, and integrity of the officers, directors, and principal shareholders of the applicant, its subsidiaries, and parent company;
4. Whether the applicant’s redemption policy meets the Act’s standards; and
5. Any other factors established by the primary regulator necessary to ensure the safety and soundness of the PPSI.^[7]

Section 5 of the GENIUS Act also establishes certain requirements related to specific timelines, evaluation criteria, and appeals for PPSI applications:

• Timing. The primary regulator must render a decision within 120 days of receiving a “substantially complete” application, which is one that contains sufficient information to render a decision on whether the statutory factors are satisfied, or the application is automatically deemed approved.^[8]
• Notice of Substantial Completeness. The primary regulator must notify the applicant within 30 days of receiving the application as to whether it considers the application substantially complete and, if not, the additional information the applicant must provide for it to be considered substantially complete.^[9]
• Denial of Application. The primary regulator may only deny a substantially complete application if it determines the applicant’s activities would be unsafe or unsound, based on the statutory factors.^[10]
• Appeals. The primary regulator must provide the applicant written notice explaining a denial within 30 days.^[11] The applicant may make a written request within 30 days of receipt of notice for an oral or written hearing before the primary regulator to appeal the denial.^[12]

Finally, the GENIUS act provides a safe harbor under which a primary regulator “may waive the application of the requirements of [the GENIUS Act] for a period not to exceed 12 months beginning on the effective date of [the GENIUS Act], with respect to . . . a subsidiary of an [IDI], if the [IDI] has an application pending for the subsidiary to become a [PPSI] on that effective date.”^[13]

FDIC Proposed Rule

The NPRM seeks to implement the aforementioned sections of the GENIUS Act for applications for subsidiaries of FDIC-supervised IDIs. Under the NPRM, an applicant would submit a letter application to the FDIC, filed in the appropriate FDIC region, containing information listed in the regulation.^[14] The NPRM states that the FDIC intends to minimize the regulatory burden by seeking only information needed to evaluate an application against the GENIUS Act, without considering other factors.^[15] The FDIC will also make use of any information available to it as the primary regulator of the applicant “such as supervisory and examination information” to avoid the submission of duplicative information.^[16] While the FDIC does not propose any additional factors it would consider in an application, an “applicant may . . . include any other materials or information that it would like the FDIC to consider.”^[17]

The bulk of the proposed rule describes the information required to be included in the application, which is meant to enable the FDIC to evaluate the aforementioned statutory factors:

1. Description of Proposed Payment Stablecoin Activities. The applicant would be required to provide “a description of the proposed payment stablecoin and the proposed activities of the subsidiary of the applicant, including related activities of the applicant, how the subsidiary plans to maintain the proposed payment stablecoin’s stable value, or the reasonable expectation thereof, and any proposed incidental activities to the payment stablecoin activities or digital asset service provider activities.”^[18] This includes a description of entities involved and third parties participating in the proposed payment stablecoins activities as well as a description of any incidental activities and related activities that directly support payment stablecoin activities.^[19]
2. Relevant Subsidiary Financial Information. The applicant would be required to provide “relevant financial information for the subsidiary, including planned capital and liquidity structure; reserve assets and composition and associated asset management plan; and financial projections for the first three years of operations.”^[20] Such relevant financial information would be expected “to demonstrate consistency with forthcoming regulations that would implement the standards required by . . . the GENIUS Act.”^[21] Relevant financial information would also include “financial projections for the first three years of the subsidiary’s operations,” which is in keeping with FDIC practice.^[22]
3. Ownership and Control Documents. The applicant would be required to provide “a description of the subsidiary’s ownership and control structure; organizing documents; and a list of the subsidiary’s proposed directors, officers, and shareholders (if different from the applicant), including a statement as to whether any of the proposed directors and officers have been convicted of a felony offense involving insider trading, embezzlement, cybercrime, money laundering, financing of terrorism, or financial fraud.”^[23] The FDIC would also accept proposed or draft documents, “with final versions to be provided when available.”^[24]
   • • In the circumstance that multiple banks are proposing to back or offer a payment stablecoin through a consortium structured as a subsidiary of an FDIC-supervised IDI, then the application would “include the governance structure of such arrangement” and a single application would be accepted and processed on behalf of all FDIC-supervised members of the consortium, “if the consortium could be considered a subsidiary of each.”^[25]
4. Policies and Procedures. The applicant would be required to provide “relevant policies and procedures and customer agreements, including for custody and safekeeping; segregating customer and reserve assets; recordkeeping; reconciliation and transaction processing; redemption; and BSA/anti-money laundering (AML)/countering the financing of terrorism (CFT) and economic sanctions requirements pursuant to section 4(a)(5) of the GENIUS Act.”^[26] Such policies and procedures would be expected to include any disclosures or notices required under the GENIUS ACT and other applicable laws and regulations.^[27]
5. Engagement Letter. Finally, the applicant would be required to provide “an engagement letter with a registered public accounting firm.”^[28]

The proposed sections on processing the applications, including timelines and other requirements, as well as decisions on the application closely follow the statutory requirements of the GENIUS Act and do not impose any additional requirements.^[29] The sections on appeals and final determination similarly follow the GENIUS Act. For example, the NPRM would require the FDIC to notify an applicant within 30 days as to whether the application is “substantially complete” and to make a decision within 120 days of receiving a substantially complete application.

In addition, the FDIC would treat denial of an application “as akin to a material supervisory determination, requiring a denied applicant to follow procedures similar to the process for an appeal of a material supervisory determination but within the timelines provided under the GENIUS Act.”^[30] Note that the GENIUS Act provides for the right to and the timelines for an appeal, but does not specify an appeal procedure. As such, the proposed rule as a whole, outside of the information required in an application filing, closely follows the language of the GENIUS Act and does not impose any additional requirements except where necessary.

Finally, the NPRM does not include a provision for formal procedures on requesting a waiver under the GENIUS Act’s safe harbor “due to the temporary nature of the provision and the case-by-case analysis required for any waiver.”^[31] Nevertheless, an applicant is still allowed to “request a waiver of certain requirements of the GENIUS Act regarding a pending application.”^[32] A waiver request would be made in writing and would explain “the basis for the request, the extent of the requirements to be waived, and the time period sought.”^[33] Neither the Act nor the NPRM establish any formal criteria to be evaluated in determining whether a safe harbor waiver should be granted.

Request for Comments

The FDIC requested comments on all aspects of the proposed rule.^[34] However, they also sought responses to a number of specific questions, as follows:^[35]

1. Does the proposed rule adequately reflect the application process outlined by Congress in the GENIUS Act? How could the proposed rule be improved to better align with the GENIUS Act’s application requirements?
2. The proposed rule would require applicants to submit a letter application. Should the FDIC consider requiring applicants to instead submit a structured form to be developed by the FDIC? What are the advantages and disadvantages of each approach?
3. Are the proposed filing content requirements appropriate to garner sufficient information for the FDIC to evaluate the factors described in section 5(c) of the GENIUS Act? Is it clear what information the FDIC would expect the contents of a filing to contain under the proposed rule? Are there additional types of information the FDIC should consider? Should the FDIC seek to remove any of the proposed types of information? If so, please explain how the addition or removal of such information would facilitate the FDIC’s consideration of the factors.
4. Among the factors to be considered and listed in section 5(c), the FDIC may establish any other factors to be considered. The FDIC is not proposing to establish other factors beyond those listed in the GENIUS Act as indicated by the proposed rule. Should the FDIC consider other factors? If so, please describe the additional factors that the FDIC should consider and why they would be necessary to consider whether the activities of the applicant would potentially be unsafe or unsound.
5. What types of information should applicants submit to the FDIC to substantiate the sufficiency of their capital or liquidity structures? What information can best demonstrate the appropriate composition, custody, and valuation of the reserve assets backing the payment stablecoin?
6. What types of ownership or control structures of PPSIs may be proposed that the FDIC has not considered? Does the proposed rule capture the types of information the FDIC would need about such ownership or control structures to evaluate the factors? Why or why not?
7. Does the proposed rule effectively capture the types of policies, procedures, and customer agreements of the applicant and/or PPSI necessary to evaluate the factors? What information could be eliminated or added in the proposed rule to allow the FDIC to evaluate the factors while minimizing application burden?
8. The FDIC has determined not to include a provision in the proposed regulatory text regarding procedures for requesting a waiver under the GENIUS Act’s safe harbor provision due to the temporary nature of the provision and the case-by-case analysis required for any waiver. Should the FDIC include regulatory text on this provision? Why or why not? In what circumstances might an applicant request a waiver of provisions of the GENIUS Act, and what provisions would the applicant request to be waived?
9. Does the proposed appeal process effectively protect an applicant’s due process, minimize regulatory burden, and meet the requirements of the GENIUS Act? Are there any other possible processes that could be used for appeals of denied applications?
10. Are [sic] the estimate of the number of applications received under this section and the potential costs of such applications likely to be accurate? Why or why not?
11. Would the proposed rule have any costs, benefits, or other effects that the FDIC has not identified?

Comments are due to the FDIC no later than 60 days from the date of publication of the NPRM in the Federal Register.^[36]

Takeaways

The FDIC’s NPRM is the first of multiple rules that federal regulators and the Treasury Department will promulgate. Although the OCC had previously issued a request for comment related to implementation of the Act, it did not propose any rules.^[37] Likewise, the Treasury Department has only issued an advanced notice of proposed rulemaking, seeking comments on the rules that it will propose under the GENIUS Act (with comments due in November). The NPRM’s approach, therefore, may inform approaches of other regulators.

Aside from other proposed rules implementing the GENIUS Act’s application provisions, the FDIC is likely to issue rules implementing other provisions of the GENIUS Act. According to the prepared statement of Acting Chairman Travis Hill at the board meeting during which the proposal was approved, the FDIC expects, in the months ahead, “to issue a proposed rule to establish the statutorily mandated capital, liquidity, and risk management requirements for subsidiaries of FDIC-supervised institutions that are approved to be PPSIs, among other GENIUS Act-related workstreams.”^[38]

Given that the GENIUS Act is less detailed on such requirements, and the primary regulators possess the expertise to impose requirements related to, for example, capital, liquidity, and risk management, these rulemakings are likely to be more involved and invite much more comment. As such, firms interested in issuing payment stablecoins in the US should not only have a close understanding of the statutory text of the GENIUS Act but also be prepared to be involved in the notice and comment rulemaking process in the coming months.

For more information or assistance navigating the FDIC’s proposed rule, preparing comments, and developing strategies for compliance with the GENIUS Act, please contact Steptoe’s Financial Innovation and Regulatory team.

^[1]See Press Release, FDIC Approves Proposal to Establish GENIUS Act Application Procedures for FDIC-Supervised Institutions Seeking to Issue Payment Stablecoins, Fed. Deposit Ins. Corp. (Dec. 16, 2025), available at https://www.fdic.gov/news/press-releases/2025/fdic-approves-proposal-establish-genius-act-application-procedures-fdic.

^[2]Fed. Deposit Ins. Corp., Approval Requirements for Issuance of Payment Stablecoins by Subsidiaries of FDIC-Supervised Insured Depository Institutions (proposed Dec. 16, 2025), https://www.fdic.gov/board/federal-register-notice-approval-requirements-issuance-payment-stablecoins-subsidiaries-fdic.

^[3]See 12 U.S.C. 5902(a).

^[4]12 U.S.C. 5902(23)(A).

^[5]See 12 U.S.C. 5901(25).

^[6]12 U.S.C. 5904(a)(1).

^[7]See 12 U.S.C. 5904(b), (c).

^[8]See 12 U.S.C. 5904(d)(1)(A), (1)(B)(i), (3).

^[9]See 12 U.S.C. 5904(d)(1)(B)(ii).

^[10]See 12 U.S.C. 5904(d)(2)(A).

^[11]See 12 U.S.C. 5904(d)(2)(B).

^[12]See 12 U.S.C. 5904(d)(2)(C).

^[13]12 U.S.C. 5904(f)(1).

^[14]See Fed. Deposit Ins. Corp., Approval Requirements for Issuance of Payment Stablecoins by Subsidiaries of FDIC-Supervised Insured Depository Institutions at 11 (proposed Dec. 16, 2025), https://www.fdic.gov/board/federal-register-notice-approval-requirements-issuance-payment-stablecoins-subsidiaries-fdic.

^[15]Id.

^[16]Id.

^[17]See id. at 11-12.

^[18]Id. at 12.

^[19]See id.

^[20]Id. at 13.

^[21]Id. at 14.

^[22]Id.

^[23]Id.

^[24]Id.

^[25]Id. at 14-15.

^[26]Id. at 15.

^[27]See id.

^[28]Id. at 16.

^[29]See, e.g., id. at 18 (“Therefore, paragraph (g) . . . would largely follow the language of the GENIUS Act in describing the FDIC’s decision-making process.”).

^[30]Id. at 19.

^[31]Id. at 21.

^[32]Id. at 20.

^[33]Id. at 21.

^[34]See id. at 30.

^[35]Id. at 30-32.

^[36]See id. at 1.

^[37]Press Release, Treasury Issues Request for Comment Related to the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, U.S. Dep’t of the Treasury (Aug. 18, 2025), https://home.treasury.gov/news/press-releases/sb0228.

^[38]Statement, Proposed Rule Regarding Approval Requirements for Issuance of Payment Stablecoins by Subsidiaries of FDIC-Supervised Insured Depository Institutions, Fed. Deposit Ins. Corp. (Dec. 16, 2025), https://www.fdic.gov/news/speeches/2025/proposed-rule-regarding-approval-requirements-issuance-payment-stablecoins.