FDIC Proposes Bank Stablecoin Framework to Spur Digital Payments Innovation

The U.S. Federal Deposit Insurance Corp. has proposed a regulatory framework that could allow banks to issue payment stablecoins via a subsidiary, a significant step in the implementation of the GENIUS Act according to Cointelegraph. The rule, which is now open for public comment, sets out an application process that would let banks seek approval to issue dollar-backed tokens, subject to assessments of safety and soundness. Under the proposal, the FDIC would serve as the primary federal regulator for the subsidiary's stablecoin activities as reported by Bloomberg.

The initiative aligns with a broader push by U.S. regulators to bring stablecoins under a clear legal and supervisory structure. The GENIUS Act, signed into law by President Donald Trump in July, mandates that stablecoins be fully backed by high-quality liquid assets and requires annual audits for major issuers. The FDIC's new proposal outlines how regulated institutions could meet these requirements while minimizing regulatory burdens for applicants as detailed by Coindesk.

The FDIC's acting chair, Travis Hill, emphasized that the tailored application process would enable the agency to evaluate the financial condition, management quality, and redemption policies of both the subsidiary and its parent institution according to Coinotag. The plan requires applicants to submit detailed descriptions of their proposed activities, including ownership structures and engagement with registered public accounting firms as outlined by The Block.

. Once approved, the FDIC would oversee the subsidiary's stablecoin operations, ensuring compliance with the GENIUS Act's mandates as noted by Seeking Alpha.

Implications for the Banking and Crypto Industries

The proposed rule signals a shift in how U.S. banks can engage with digital assets, potentially expanding the use of stablecoins in everyday financial transactions. The FDIC's approach appears to encourage responsible innovation while maintaining consumer protections and financial stability. By enabling banks to issue stablecoins, the framework could also foster greater adoption of blockchain technology in the financial system.

For crypto companies and financial institutions, the rule provides a clearer pathway for entering the stablecoin market. The proposal requires stablecoin reserves to be held in U.S. currency, demand deposits, or approved assets, which aligns with growing regulatory expectations for transparency and accountability. This could help legitimize stablecoins as a mainstream tool for payments and settlements, particularly in cross-border transactions.

Market and Regulatory Reactions

The announcement has been met with cautious optimism from market participants. Some analysts suggest that the FDIC's proposal could lead to increased competition in the stablecoin market, as banks and fintechs explore new opportunities for offering digital tokens as observed by CoinCentral. For example, major players like Visa have already begun experimenting with stablecoin-based settlement services, indicating a broader trend toward digital asset adoption as reported by Global Newswire.

Meanwhile, the FDIC's rulemaking process also reflects a broader regulatory consensus under a Republican-majority board. Acting Chair Hill has previously signaled the agency's intent to issue additional proposals in the coming months, focusing on capital, liquidity, and risk management requirements for stablecoin issuers as detailed by Global Newswire. These steps could help shape the long-term structure of the stablecoin ecosystem in the U.S.

Looking Ahead

The next phase in the FDIC's plan involves a 60-day public comment period, during which stakeholders can submit feedback on the proposed framework. The agency has emphasized its commitment to incorporating market perspectives into the final rulemaking process, suggesting that the outcome could be shaped by input from banks, crypto firms, and consumer advocates.

In the broader regulatory landscape, the FDIC's move is part of a coordinated effort among federal agencies to establish a comprehensive stablecoin framework. The Office of the Comptroller of the Currency and the Federal Reserve have also been working on complementary initiatives to ensure consistency and clarity in the regulation of digital assets. This multi-agency approach aims to prevent regulatory arbitrage while promoting innovation and stability in the financial system.

As the stablecoin market continues to evolve, the FDIC's proposal offers a potential blueprint for how traditional financial institutions can participate in the digital asset economy. With the public comment period now open, the final rule could set a precedent for future stablecoin innovation in the U.S.