FDIC Proposes GENIUS Act Application Process for IDI Subsidiary Stablecoin Issuers

On December 16, 2025, the Federal Deposit Insurance Corporation (“FDIC”) Board of Directors issued a proposal (the “NPRM”) to implement the application-related provisions of the Guiding and Establishing National Innovation for US Stablecoins Act (the “GENIUS Act”) for subsidiaries of FDIC-supervised insured depository institutions (“IDIs”).

The FDIC’s proposed application process closely tracks the GENIUS Act’s statutory factors, timelines, and denial standard while building out the application process, content and requirements in a manner that is consistent with existing FDIC processes applicable to FDIC-supervised IDIs. Comments are due no later than February 17, 2026.

Background

The GENIUS Act establishes a comprehensive federal framework for payment stablecoin issuance, generally restricts issuance to permitted payment stablecoin issuers (“PPSIs”), and directs each primary federal payment stablecoin regulator to adopt rules governing how applications to become a PPSI will be received, reviewed, and decided. The review and decision framework must conform to defined factors, timelines and decisioning standards set forth in the GENIUS Act, including the basis for denials and appeal rights of applicants.

The NPRM applies to IDIs for which the FDIC has primary supervisory authority, which includes state-chartered insured banks that are not members of the Federal Reserve System and state-chartered savings associations. This NPRM does not apply to other IDIs (e.g., national banks or state member banks) or to other federal qualified payment stablecoin issuers, which will be addressed by subsequent rulemakings by the Office of the Comptroller of the Currency (“OCC”), Board of Governors of the Federal Reserve System (“FRB”), and the National Credit Union Administration (“NCUA”), as applicable. Below is a chart of the PPSIs regulated by each federal payment stablecoin regulator.

Overview of the Proposed FDIC Application Process

This FDIC proposal is the first implementing rulemaking for the application processes. It sets out the procedures for subsidiaries of FDIC-supervised IDIs to obtain approval as PPSIs from the FDIC, which will also serve as the applicable primary federal stablecoin regulator for those entities.

At a high level, the NPRM leverages existing FDIC application processes, while tailoring content and timelines to the GENIUS Act’s framework. The following sets forth a brief summary of the FDIC’s proposed application process:

• Filing requirements: An applicant (which the NPRM defines as the IDI itself, not the subsidiary) would submit a letter application (i.e., not a structured form) to the appropriate FDIC regional office. The FDIC will leverage existing supervisory and examination information available to it as the primary federal regulator of the applicant to minimize duplicative information to be submitted as part of the application.
• Required application contents: An application would be required to include five minimum elements, which the FDIC has determined are necessary to evaluate the factors set forth in section 5(c) of the GENIUS Act, and can include additional information the applicant deems appropriate. These elements are:
• Business and activities description: The application must include a description of the proposed stablecoin and activities, including the division of functions between the bank and its subsidiary, relationships with third parties, sources of strength or intercompany arrangements, and any incidental or digital asset service provider activities.
• Financial plan and reserves: The application must also provide financial information covering capital and liquidity, the composition of reserves and a reserve asset management plan (including whether any reserves will be maintained in tokenized form), and three-year projections.
• Governance and integrity: The application must include governance and organizational information, such as ownership and control, organizational documents, and the proposed directors, officers, and principal shareholders, together with a statement addressing specified felony convictions for proposed directors or officers.
• Policies and customer agreements: The application must include policies and customer agreements, including those addressing custody and safekeeping, segregation of customer and reserve assets, recordkeeping, reconciliation and transaction processing (on- and off-chain), redemptions pursuant to the GENIUS Act framework, and programs for BSA/AML/CFT and sanctions compliance, along with terms of use, privacy disclosures and other required disclosures under the GENIUS Act or other applicable law.
• Auditor engagement letter: Finally, the application must include an engagement letter with a registered public accounting firm, which the FDIC has determined is necessary to support compliance with the GENIUS Act’s monthly reserve disclosure and examination requirement.
• Information requests: The FDIC may request additional information, but only to the extent necessary solely to consider the GENIUS Act’s section 5(c) factors. While section 5(c) permits the FDIC to establish “other factors” that are necessary to ensure the safety and soundness, the FDIC is not proposing to add any such factors at this time.
• Processing timeline: Within 30 days after receiving an application, the FDIC will notify the applicant whether the filing is substantially complete, and, after that point, the applicant must report material changes. If the FDIC fails to notify the applicant within 30 days of receiving an application, the application will be deemed substantially complete. Within 120 days of determining (or deeming) an application to be substantially complete, the FDIC must approve or deny the application. If the FDIC fails to approve or deny an application within 120 days of receiving a substantially complete application, the application will be deemed approved.
• Denials and appeals: The FDIC may deny an application only if the activities would be unsafe or unsound under the statutory factors in section 5(c) of the GENIUS Act. Upon denial, the FDIC must provide a written notice explaining the basis of the denial with specificity, and must include recommendations to address all material shortcomings within 30 days. Appeals and requests for hearings following a denial proceed through the FDIC’s existing material supervisory determination process, with timelines accelerated to align with the GENIUS Act’s requirements.
• Conditional approvals: The FDIC may approve an application with conditions, including conditions the FDIC imposes as routine under its regulations, but any conditions may not impose requirements beyond those permitted under Section 4 of the GENIUS Act.

While not expressly contemplated by the GENIUS Act, the NPRM also anticipates consortium structures in which a proposed payment stablecoin is to be backed by or offered by multiple banks, and indicates that the FDIC could accept a single filing if the consortium vehicle qualifies as a “subsidiary” of each participating IDI.

Key Takeaways

The GENIUS Act was enacted in July 2025 and will take effect in January 2027, or 120 days after final implementing regulations are issued, if earlier. The FDIC anticipates finalizing the NPRM before the GENIUS Act’s effective date.

The NPRM hews closely to the GENIUS Act’s application framework, mirroring the statute’s review framework, narrow denial standard, defined timelines and deemed outcomes for noncompliance with those timelines. Within that statutory boundary, the NPRM proposes to integrate the PPSI application process, including appeals, into existing processes applicable to FDIC-supervised IDIs.

For IDIs contemplating applications for subsidiaries to serve as PPSIs, the NPRM provides insight into the types of information and the level of detail that will be expected by the FDIC. Even prior to finalization of the NPRM, IDIs can leverage this insight to begin assembling materials and structuring submissions to place themselves at the front of the line for submission once applications are accepted. Applicants that intend to file before the GENIUS Act’s effective date may also consider whether to request a temporary waiver of the statutory requirements on a case-by-case basis.

 

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¹ While the FDIC is the relevant federal regulator of insured state-licensed branches of foreign banks, the NPRM implies that subsidiaries of such IDIs are not eligible to become PPSIs. 

² The GENIUS Act allocates the primary federal stablecoin regulator for state chartered depository institutions that are not IDIs (which include uninsured state banks and savings associations, and insured state-licensed branches of foreign banks) to the FDIC, OCC or FRB.