New federal proposal mandates that banks isolate digital asset risks in separate subsidiaries, marking a pivotal step in implementing the 2025 GENIUS Act.
WASHINGTON - The Federal Deposit Insurance Corporation (FDIC) has taken a decisive step toward integrating digital assets into the traditional banking system, unveiling a comprehensive regulatory framework that allows banks to issue payment stablecoins-but only through separately capitalized subsidiaries. The proposal, approved unanimously by the FDIC board on Tuesday, marks the first major regulatory implementation of the GENIUS Act, signed into law by President Donald Trump in July 2025.
The new rules are designed to modernize the U.S. financial infrastructure while strictly insulating insured deposits from the volatility often associated with the cryptocurrency market. By mandating that issuance occur outside the core bank entity, regulators aim to create a firewall between everyday banking activities and the burgeoning market for blockchain-based payments. This move signals a significant shift in federal policy, moving from skepticism to a structured, albeit cautious, embrace of digital currency technology.
Table of contents [Show]
According to the 38-page document published on the agency's website, the proposed regulation establishes a formal application process for FDIC-supervised institutions. The core requirement is structural: state-chartered banks cannot issue stablecoins directly. Instead, they must establish a dedicated subsidiary that qualifies as a "Permitted Payment Stablecoin Issuer" (PPSI).
The framework lays out specific criteria for approval, focusing on safety and soundness. Regulators indicate that the application process will scrutinize the subsidiary's ability to manage liquidity risks and maintain 1:1 reserves, ensuring that every digital token is fully backed by high-quality liquid assets. This "tailored application" process allows the FDIC to assess the parent institution's stability before granting permission to expand into digital assets.
"The FDIC has begun work to promulgate rules to implement the GENIUS Act; we expect to issue a proposed rule to establish our application framework later this month and a proposed rule to implement the GENIUS Act's prudential requirements for FDIC-supervised payment stablecoin issuers early next year." - Acting Chairman Hill, FDIC
The primary driver behind the subsidiary mandate is risk management. Cointelegraph reports that the FDIC is intent on "walling off digital asset volatility from core banking functions." By legally separating the stablecoin issuer from the insured depository institution, regulators ensure that a failure in the stablecoin arm-similar to the crises seen in the crypto winter of previous years-does not threaten the solvency of the bank itself or the Deposit Insurance Fund.
For the financial industry, this proposal provides long-awaited clarity. Until now, banks have been hesitant to engage with stablecoins due to regulatory ambiguity. American Banker notes that the rule sets the process for banks to finally enter this space legally. This could lead to a wave of "bank-grade" stablecoins entering the market, potentially challenging existing non-bank issuers like Tether or Circle by offering consumers the perceived security of established financial institutions, even if the tokens themselves are not deposit-insured.
The timing of this proposal is inextricably linked to the broader political landscape of 2025. The GENIUS Act, signed in July, mandated this regulatory expansion. CoinDesk reported earlier this month that Acting Chairman Hill had committed to this timeline during congressional testimony. The act contemplates a multi-regulator approach, with states and federal entities sharing supervision, but the FDIC holds the keys for any insured bank wishing to participate.
This move effectively operationalizes the Trump administration's legislative agenda regarding digital assets, moving beyond theoretical support to creating the actual plumbing for a crypto-integrated economy. However, as TradingView highlights, this is just the first step. The specific "capital requirements, liquidity standards, and reserve asset diversification standards" are set to be unveiled in a separate rulemaking process early next year.
The release of the proposed rule triggers a public comment period, during which banks, fintech companies, and consumer advocacy groups will debate the specifics of the application requirements. Industry experts anticipate intense discussion regarding the capital requirements for these new subsidiaries-if they are set too high, smaller community banks may be priced out of the market, leaving the stablecoin sector dominated by Wall Street giants.
Looking ahead to 2026, the focus will shift to the second phase of rulemaking concerning prudential standards. As FinanceFeeds reports, meeting these approval standards will be the gateway for any bank hoping to offer stablecoin products inside the federal banking system. Once finalized, the U.S. could see its first federally regulated, bank-issued stablecoins, potentially transforming how money moves across borders and the internet.
Federal regulators have launched a sweeping investigation into nearly 3 million Tesla vehicles, citing concerns over traffic violations and performance in low visibility, marking a critical turning point for autonomous driving oversight.
As 2025 draws to a close, Seattle solidifies its rank as a global AI superpower. However, the region's tech sector is undergoing a massive reboot, trading speculative hype for 'boring' back-end efficiency and agentic workflows.
While global venture capital stabilized at $314 billion in 2024, the numbers hide a harsh reality: investors are writing fewer checks, forcing a pivotal shift toward capital efficiency.
