Federal regulators in the United States are turning the GENIUS Act, the law that sets up a framework for payment stablecoins, into detailed rules. This article explains what the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) have proposed so far and what it does and does not mean for people who hold or use stablecoins. Everything below describes United States rules; other jurisdictions, including the UK and the EU, regulate stablecoins under separate regimes.
What is a payment stablecoin, and why does it need its own rules?
A stablecoin is a digital token designed to hold a steady value, usually one dollar, so it can be used to move money quickly between digital wallets. The GENIUS Act focuses on what it calls payment stablecoins and on the “permitted payment stablecoin issuers” (PPSIs) allowed to create them. In the proposals discussed here, the abbreviation PPSI refers to those issuers.
The reason for dedicated rules is straightforward. A token that promises to be redeemable for dollars is only as sound as the assets behind it and the issuer’s ability to honor redemptions. Without standards for reserves, capital and redemption, holders depend entirely on the issuer’s own promises. The proposals aim to put those standards into regulation.
Which agencies are writing the rules?
Different regulators supervise different kinds of issuers, so several agencies are issuing their own proposals. Two have been confirmed from their own announcements:
- The Federal Reserve Board announced on September 24, 2026, that it was requesting public comment on two proposals for issuers it supervises.
- The FDIC Board approved a notice of proposed rulemaking on April 7, 2026, for FDIC-supervised issuers, which include stablecoin subsidiaries of FDIC-supervised banks.
The FDIC has also published a separate proposal on customer identification programs for these issuers. Because each agency covers the institutions it supervises, a stablecoin’s rules can depend on who the issuer’s regulator is. Readers should treat each proposal as describing one regulator’s slice of the framework rather than the whole picture.
What would the Federal Reserve’s proposals require?
According to the Federal Reserve, the first proposal would require Board-supervised issuers to “fully back their stablecoins with certain permissible reserve assets.” The Fed’s announcement names short-term Treasury bills and certain other high-quality, liquid assets as examples. The same proposal would set standardized capital requirements aimed at certain credit and operational risks, plus risk management standards. It also covers firms that safekeep the assets backing payment stablecoins, and clarifies that stablecoin activities are permissible for Board-supervised banks.
The second proposal sets up a tailored application process for Board-supervised banks that want to issue payment stablecoins. Applicants would submit a business plan and financial information, among other documents, and the process includes appeals, hearings and final determinations.
The Fed’s proposals page lists a comment deadline of November 30, 2026. Its press release says comments close 60 days after publication in the Federal Register. That page also describes a separate piece of the proposal implementing the Act’s prohibition on tying, which applies to all issuers.
What does the FDIC’s proposal say about redemption and reserves?
The FDIC’s summary says its proposed rule would generally require issuers to redeem a payment stablecoin within two business days. It would also require an issuer to “maintain identifiable reserve assets,” with capital and risk management standards tailored to the issuer’s size, complexity and risk profile. The FDIC’s chairman, Travis Hill, said in a statement that the proposal would set prudential requirements covering areas such as reserve assets, redemptions, permissible activities and capital.
“Within two business days” is a regulatory timeline for the issuer, not a promise about how fast any particular app or exchange will credit a user. Holders who redeem through an intermediary may face that intermediary’s own terms, which the proposals do not govern in the way they govern the issuer.
Are stablecoins covered by FDIC deposit insurance?
This is the question most likely to matter to ordinary readers, and the FDIC’s proposal addresses it directly. It states that deposits held as reserves for a payment stablecoin “would not be insured to payment stablecoin holders on a pass-through basis.”
In plain terms: if an issuer keeps some reserves as deposits at an insured bank, that does not mean the people holding the stablecoin are individually insured. Pass-through insurance is a feature of certain account structures, covered in the explainer on how FDIC deposit insurance ownership categories work, where coverage can flow to the underlying owners. The FDIC proposal says this would not apply to stablecoin holders in the case of reserve deposits.
The proposal also seeks public feedback on the agency’s approach to pass-through insurance, so the final text could differ from the proposal.
How do tokenized deposits differ from stablecoins?
The proposal draws a line between the two. A tokenized deposit is a bank deposit recorded using newer technology. The FDIC says its rule would provide that deposit insurance “does not depend upon the technology or recordkeeping used to record an IDI’s deposit liabilities,” where IDI means an insured depository institution. It would also clarify that tokenized deposits meeting the statutory definition of a deposit are treated no differently under the Federal Deposit Insurance Act from other deposits.
| Feature | Payment stablecoin | Tokenized deposit |
|---|---|---|
| What it is | Token issued by a PPSI, backed by reserve assets | Bank deposit recorded in tokenized form |
| Deposit insurance (per FDIC proposal) | No pass-through insurance to holders on reserve deposits | Insured like other deposits if it meets the statutory definition |
| Who is liable | The issuer, under its reserve and redemption duties | The bank holding the deposit |
The table simplifies the proposal and is general information, not a legal reading of any specific product. Insurance limits and ownership categories still apply to deposits as they would anywhere else.
What stays unsettled while the rules are proposals?
Proposals are not final rules. Each agency must consider the comments it receives, and details can change. Neither the Fed’s nor the FDIC’s announcements describe final rules, so the picture could shift before the framework takes effect.
Several practical questions remain open as analysis rather than confirmed fact:
- How consistently the different agencies’ standards will line up for issuers under different supervisors.
- How intermediaries such as exchanges and apps will describe redemption rights to customers.
- How the treatment of yield will be settled; the FDIC chairman noted that the proposal asks for comment on the prohibition on yield, among other topics.
Anyone following the topic should rely on the agencies’ own announcements, since timing and details are still moving.
How does this connect to everyday payments?
Stablecoins are one of several ways that money can move faster. Public instant payment systems are another, as described in the explainer on how instant payments are reshaping bank transfers. Traditional transfers rely on layers of banks and settlement systems, outlined in what happens when money moves between banks. Stablecoins attempt a different route, but the proposals show that regulators want issuers to meet bank-like standards on reserves, capital and redemption, even where deposit insurance does not extend to token holders.
A framework still being drafted
The direction of the proposals is clear: full backing by high-quality reserve assets, capital and risk standards, a two-business-day redemption expectation in the FDIC’s draft, and no pass-through deposit insurance for stablecoin holders on reserve deposits. What is not yet clear is the final wording, which depends on public comment. For anyone who uses stablecoins, the most reliable habits are to understand who the issuer is, which regulator supervises it, and that a stablecoin is not the same thing as an insured bank deposit.
This article provides general information, not personalized financial advice. Rules, deadlines and rates change, so check current official sources.
Sources: Federal Reserve; Federal Deposit Insurance Corporation
