The Federal Deposit Insurance Corporation on April 7 approved a notice of proposed rulemaking that would establish prudential standards for bank-issued stablecoins under the GENIUS Act. The rule mandates 1:1 reserves, two-business-day redemption windows, a $5 million minimum capital floor for new...
"Tokenization offers much more than just a shiny version of Zelle or Venmo." — Travis Hill, Chairman, Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation on April 7 approved a notice of proposed rulemaking that would establish prudential standards for bank-issued stablecoins under the GENIUS Act. The rule mandates 1:1 reserves, two-business-day redemption windows, a $5 million minimum capital floor for new issuers, and a 12-month operating expense liquidity buffer. Stablecoin holders would receive no FDIC deposit insurance; tokenized bank deposits, by contrast, would retain full insurance protections.
The FDIC action follows the OCC's 376-page proposed rule published in February, Coinbase's conditional national trust bank charter granted April 2, and Kraken's March 4 Federal Reserve master account approval — the first ever for a crypto-native firm. Together, these moves indicate that U.S. banking regulators are constructing a complete prudential framework for digital dollar assets, even as the legislative vehicle — the CLARITY Act — remains stalled in the Senate Banking Committee. A $322 billion stablecoin market and a consortium of Wall Street banks preparing joint stablecoin issuance are waiting on the other side.
The FDIC Board of Directors voted to approve a notice of proposed rulemaking on April 7, 2026, implementing the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) for institutions under its supervision. The rule targets two categories of entities: permitted payment stablecoin issuers (PPSIs) that are subsidiaries of FDIC-supervised banks, and insured depository institutions (IDIs) that engage in stablecoin-related activities such as custody and safekeeping.
Reserve requirements. Every stablecoin in circulation must be backed 1:1 by eligible reserve assets held in segregated accounts. Eligible assets include U.S. cash, insured bank deposits, short-term Treasury notes, government money market funds, and tokenized versions of these instruments.
Redemption. Issuers must honor redemption requests within two business days at par value, a standard tighter than the T+1 settlement norm in traditional securities markets but looser than real-time settlement expectations in crypto-native markets.
Capital. New PPSIs face a minimum capital requirement of $5 million for their first three years of operation. Regulators may impose higher thresholds based on the issuer's size, complexity, and risk profile.
Liquidity buffer. Separately from the 1:1 reserve pool, PPSIs must maintain highly liquid assets equal to 12 months of total operating expenses — an operational backstop designed to ensure continuity during market stress.
144 questions. Chairman Travis Hill invited "robust feedback" on 144 specific questions embedded in the proposal, covering permissible activities, prohibited activities, capital adequacy for parent institutions, pass-through insurance treatment, and yield prohibition enforcement. The comment period runs 60 days from Federal Register publication.
The Office of the Comptroller of the Currency published its own GENIUS Act implementation proposal in February 2026, running to 376 pages. The OCC framework covers national banks, federal savings associations, and federally chartered trust companies seeking to issue payment stablecoins.
Key provisions align with — but do not perfectly mirror — the FDIC rule:
The OCC comment period closes May 1, 2026.
The regulatory framework is being built in parallel with a wave of crypto-native firms securing federal banking credentials.
Coinbase. On April 2, 2026, the OCC granted conditional approval to Coinbase National Trust Company for a national trust bank charter. The entity, to be headquartered in New York, will operate as a federally regulated digital asset custodian. It will not take consumer deposits and will not carry FDIC insurance. A single federal regulator (the OCC) replaces the patchwork of state money transmitter licenses Coinbase currently holds. Coinbase joins Circle, Ripple, and Paxos, all of which received similar conditional approvals in late 2025.
The Independent Community Bankers of America (ICBA) opposed the decision. ICBA President and CEO Rebeca Romero Rainey called the approval "a grave mistake that will only serve to put U.S. consumers at risk."
Kraken. On March 4, 2026, Kraken became the first crypto company to secure a Federal Reserve master account, according to CoinDesk reporting. The approval gives Kraken's banking arm direct access to the Fed's core payment systems, enabling it to settle payments without intermediaries. The account carries limitations: no interest on reserves, no access to the discount window, no overdraft privileges. The Federal Reserve is separately targeting Q4 2026 for operational rollout of "skinny" master accounts — a broader program to widen payment rail access for eligible depository institutions.
The FDIC's proposal draws a sharp regulatory distinction between two categories of digital dollar assets.
Stablecoins. Deposits held as reserves backing a payment stablecoin would not be insured to stablecoin holders on a pass-through basis. This means a stablecoin holder has no FDIC claim if the issuer's reserve bank fails. The stablecoin is a liability of the issuer, not a deposit at a bank — regardless of where the reserves sit.
Tokenized deposits. The proposal confirms that deposits recorded using tokenization or distributed ledger technology retain their status as deposits under the Federal Deposit Insurance Act. If a tokenized instrument satisfies the statutory definition of "deposit," it receives the same insurance treatment as a traditional deposit. The technology used for recordkeeping is irrelevant.
This distinction matters because major banks are developing both products simultaneously. JPMorgan's Kinexys platform already operates tokenized USD deposits (JPMD) on Base and Polygon public blockchains. A tokenized JPMorgan deposit carries FDIC insurance. A JPMorgan-issued stablecoin, under these rules, would not pass insurance through to holders.
The policy implication: banks may prefer issuing tokenized deposits over stablecoins to preserve the insurance wrapper their customers expect. Non-bank issuers — Tether, Circle — cannot offer tokenized deposits at all.
The regulatory clarity, once finalized, unlocks a pipeline of bank stablecoin products currently in holding patterns.
U.S. consortium. JPMorgan, Citi, Bank of America, and Wells Fargo are exploring a jointly managed, dollar-backed stablecoin, reportedly built atop existing U.S. payment rails including Zelle and The Clearing House, according to a Yahoo Finance report.
European consortium. Ten European banks — BNP Paribas, CaixaBank, ING, KBC, UniCredit, and others — formed Qivalis to launch a euro-pegged stablecoin under the EU's Markets in Crypto-Assets (MiCA) framework.
Individual bank pilots. US Bancorp is testing stablecoin issuance on the Stellar blockchain. BNY Mellon custodies stablecoins issued by Ripple and Societe Generale. None have launched production-grade stablecoin products for retail customers.
The total stablecoin market stood at approximately $322 billion as of April 1, 2026. Tether's USDT commands the largest share but declined approximately 10% in market cap during Q1 2026 amid renewed scrutiny from the New York Attorney General. Circle's USDC grew approximately 15% in the same period, reaching roughly $70 billion, driven by institutional adoption and integration with Visa and Mastercard cross-border settlement pilots.
Three overlapping timelines govern the transition from proposal to final rule:
| Agency | Proposal Date | Comment Deadline | Statutory Deadline | |--------|--------------|------------------|--------------------| | OCC | February 2026 | May 1, 2026 | July 18, 2026 | | FDIC | April 7, 2026 | ~June 6, 2026 (est.) | July 18, 2026 | | Federal Reserve | TBD | TBD | July 18, 2026 |
The GENIUS Act's July 18, 2026 regulatory deadline requires all three prudential regulators to have final rules in place. The Federal Reserve has not yet published its proposed rule — a gap that introduces timing risk. If any agency misses the deadline, the Act's enforcement provisions remain ambiguous on interim authority.
Separately, the Senate Banking Committee targets the second half of April for markup of the CLARITY Act, the companion market structure legislation. Senator Cynthia Lummis placed the markup in "the weeks of April 13 and April 20," when the Senate returns from recess.
The U.S. banking regulatory apparatus is, for the first time, building a complete prudential framework purpose-built for digital dollar assets. The FDIC's April 7 proposed rulemaking fills the last major gap on the deposit-insurer side, joining the OCC's February proposal and the Fed's forthcoming rule. The framework treats stablecoins like bank-adjacent products — subject to reserve, capital, and redemption requirements borrowed from depository institution supervision — while drawing a firm line on deposit insurance.
The yield prohibition embedded in both the OCC and FDIC proposals constrains how bank-issued stablecoins can compete with DeFi yield products. The insurance asymmetry between stablecoins and tokenized deposits may channel bank innovation toward the latter. Non-bank issuers like Circle and Tether face a regime that demands bank-like compliance without bank-like privileges.
Whether this framework encourages or constrains stablecoin adoption depends on how the 144 open questions in the FDIC proposal are resolved during the comment period — and whether the Federal Reserve publishes its own rule in time to meet the July 18 statutory deadline. The clock is running.