FDIC Proposes New Regulations on Stablecoins Under the GENIUS Act

On April 7, 2026, the Federal Deposit Insurance Corporation (FDIC) Board of Directors approved a notice proposing new regulations aimed at stabilising the rapidly evolving market for payment stablecoins within the United States. This initiative stems from the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) and introduces crucial requirements for federally supervised payment stablecoin issuers (PPSIs).

Key Features of the Proposed Regulations

1. Reserve Requirements: Issuers of payment stablecoins will be mandated to back their tokens with readily identifiable reserve assets. This measure intends to enhance transparency and confidence among users.

2. Redemption Timeline: The proposed rules stipulate that requests for redeeming stablecoins must generally be fulfilled within a two-business-day window, ensuring quicker access to funds for holders.

3. Tailored Risk Management: Capital and risk management standards will be customised to align with the size and complexity of each stablecoin issuer, allowing for a more flexible regulatory framework.

4. Limits on Yield Offerings: The draft legislation formalises restrictions on offering yield or interest to stablecoin holders, addressing the rise of issuers experimenting with rewards-based models. The FDIC is looking to outline how regulatory breaches of this prohibition will be assessed.

5. Insurance for Tokenised Deposits: While reserves that underpin stablecoins will not qualify for FDIC insurance, tokenised deposits that meet the statutory definition of a "deposit" will receive traditional deposit insurance protections, regardless of the technology used.

Chairman of the FDIC, Travis Hill, indicated that this proposal is consistent with a similar regulation suggested by the Office of the Comptroller of the Currency in February 2026. The FDIC plans to gather input from the public through a 60-day commentary period commencing upon the proposal’s publication in the Federal Register.

These developments follow a December 2025 proposal that enabled insured banks to issue stablecoins via subsidiaries, thereby facilitating a clearer path for banks to engage in the stablecoin space.

In summary, the FDIC’s proposed regulatory framework aims to ensure stability and accountability in the payment stablecoin market, addressing critical areas such as reserve backing, redemption processes, and the prohibition on yield offerings. The financial sector awaits further engagement as the public comment period opens, reflecting a significant step towards structured oversight in a rapidly growing financial landscape.