FDIC Proposes First U.S. Stablecoin Rule Under GENIUS Act: What It Means for Banks

The Federal Deposit Insurance Corporation (FDIC) has unveiled its first regulatory proposal addressing stablecoins issued or held by insured depository institutions (IDIs) under the recently enacted GENIUS Act. This rule aims to impose prudential standards on banks’ stablecoin activities, focusing on reserve requirements, risk management, and reporting, marking a significant step in integrating digital assets into the traditional banking framework.

What happened

On December 16, 2025, the FDIC proposed a rule that would regulate stablecoin activities conducted by insured banks and thrifts, as authorized under the GENIUS Act. The proposal mandates that banks must hold stablecoin reserves exclusively in cash or cash-equivalent assets, effectively restricting the asset types backing these digital tokens. This contrasts with some private stablecoins backed by a broader range of assets.

In addition to reserve requirements, the rule introduces enhanced risk management protocols for banks engaged with stablecoins. These include mandatory stress testing and liquidity requirements designed to preserve the safety and soundness of the institutions involved. The FDIC emphasizes that these standards align stablecoin reserves with traditional banking prudential norms.

The rule explicitly excludes stablecoin issuers that are not insured depository institutions, thereby limiting its scope to banks and thrifts. The FDIC has opened a public comment period, allowing stakeholders to provide feedback before the rule is finalized.

Analysis from industry observers highlights that this regulatory move aims to clarify the framework for bank participation in stablecoin markets. Some commentators interpret the proposal as an effort to enhance financial stability by subjecting stablecoins to bank-level oversight, while others caution that the restrictions on reserve assets could constrain innovation. The proposal’s exclusion of non-bank issuers has also drawn attention as a potential source of regulatory fragmentation.

Why this matters

The FDIC’s rule represents the first concrete regulatory framework in the United States to govern stablecoins issued or held by banks, signaling a significant shift in how digital assets are integrated into the traditional financial system. By requiring reserves to be held in cash or cash equivalents and imposing rigorous risk management measures, the FDIC is reinforcing the application of established banking safety and soundness standards to stablecoins.

This approach could increase confidence among market participants and regulators by reducing risks associated with asset runs or liquidity shortfalls that have previously challenged stablecoins. It also potentially lowers barriers for banks contemplating entry into stablecoin issuance or custody by providing clearer regulatory guidance, which has been a notable obstacle in the past.

However, the limitation on reserve asset types may constrain the flexibility and innovation that have characterized some private stablecoins, which often rely on a broader basket of assets. This trade-off between stability and innovation reflects a broader tension in digital asset regulation.

Furthermore, by focusing exclusively on insured depository institutions, the FDIC’s rule leaves non-bank stablecoin issuers outside this regulatory perimeter. This creates a bifurcated regulatory environment that could foster regulatory arbitrage or uneven competitive conditions between bank and non-bank stablecoins.

What remains unclear

Several important questions remain unanswered by the current proposal and accompanying commentary. The coordination mechanisms between the FDIC and other federal regulators—such as the Securities and Exchange Commission, Commodity Futures Trading Commission, and Treasury Department—regarding stablecoins, especially those issued by non-banks, have not been detailed.

It is also unclear how non-bank stablecoin issuers will respond to this evolving regulatory landscape. Whether they will seek partnerships with insured banks, convert into banks themselves, or continue operating outside this framework is not addressed.

The proposal does not provide detailed analysis of how the liquidity and reserve requirements might affect the cost structure, scalability, or technological innovation of bank-issued stablecoins, including aspects like programmability or cross-chain functionality.

Finally, there is no empirical data or forecasts about how many banks might enter the stablecoin market under this regime or how this rule might reshape competition between bank-issued and private stablecoins.

What to watch next

• The conclusion of the FDIC’s public comment period and any substantive changes made to the rule in response to stakeholder feedback.
• Announcements or disclosures from banks indicating their intentions regarding stablecoin issuance or custody under the new regulatory framework.
• Further regulatory developments or coordination efforts involving the SEC, CFTC, and Treasury concerning stablecoins, particularly non-bank issuers.
• Market responses from non-bank stablecoin issuers, including potential strategic shifts such as partnerships with banks or structural changes to comply with bank regulatory standards.
• Analyses or reports assessing the impact of the reserve and risk management requirements on stablecoin innovation, cost, and scalability once the rule is implemented.

The FDIC’s proposed stablecoin rule under the GENIUS Act marks a pivotal development in the regulatory treatment of digital assets within the U.S. banking system. While it establishes a clearer prudential framework for banks, significant uncertainties remain regarding its broader impact on the stablecoin ecosystem, non-bank issuers, and innovation dynamics. Close attention to forthcoming regulatory coordination, market reactions, and stakeholder feedback will be essential to understanding the rule’s ultimate effect.

Source: https://www.coindesk.com/policy/2025/12/16/u-s-fdic-proposes-first-u-s-stablecoin-rule-to-emerge-from-genius-act. This article is based on verified research material available at the time of writing. Where information is limited or unavailable, this is stated explicitly.