FDIC Proposes GENIUS Act Rules for Bank Stablecoin Issuers: 1:1 Reserves and 2-Day Redemptions Required

Key Takeaways:

The proposal caps counterparty exposure at 40% of total reserves. PPSIs must also demonstrate the operational ability to quickly access and convert reserves to cash if needed.

On redemption, the rule requires PPSIs to publicly disclose a redemption policy and generally fulfill requests within two business days. For large redemptions exceeding 10% of outstanding issuance value in any 24-hour period, a PPSI must notify the FDIC and may request an extension at the agency’s discretion.

Capital requirements are principles-based. New PPSIs face a $5 million minimum capital requirement, or a higher amount if conditioned by regulators, for their first three years of operation. Ongoing capital must consist of common equity tier 1 and additional tier 1 instruments, with no Tier 2 capital permitted. Parent banks must deconsolidate PPSI subsidiaries for regulatory capital purposes.

The rule also clarifies treatment of tokenized deposits. If a tokenized liability meets the Federal Deposit Insurance Act’s definition of “deposit” under 12 U.S.C. 1813(l), it receives the same insurance treatment as a traditional deposit, regardless of the underlying technology.

This is the FDIC’s second GENIUS Act rulemaking. The agency issued its first proposed rule Dec. 19, 2025, establishing application procedures for banks seeking PPSI approval through a subsidiary. Comments on that rule were extended to May 18, 2026.

The FDIC is accepting public comments on the new proposal for 60 days following Federal Register publication. The agency is seeking input on reserve buffers, additional eligible asset types, concentration limits, bankruptcy-remote structures, and the treatment of uninsured deposits.