The FDIC Just Told Banks How to Issue Stablecoins. The Fine Print Changes Everything.
The FDIC board voted unanimously on April 7 to propose new rules governing how banks can issue stablecoins under the GENIUS Act framework. Chairman Hill, Director Gould, and Director Vought all voted in favor. The rules apply to "Permitted Payment Stablecoin Issuers" — subsidiaries of FDIC-supervised banks that want to mint dollar-pegged tokens.
The headline requirement: 1:1 reserves at all times. But the real story is what counts as a reserve and what doesn't.
The Reserve Menu Is Deliberately Narrow
Eligible reserve assets are limited to six categories: US cash, Federal Reserve balances, demand deposits at insured banks, Treasury securities maturing in 93 days or less, overnight Treasury-collateralized repos, and money market fund shares holding only eligible assets. No corporate bonds. No mortgage-backed securities. No staking yield or DeFi positions.
There's also a 40% counterparty concentration cap — no issuer can park more than 40% of total reserves with a single institution. That's a direct lesson from Silicon Valley Bank's collapse. Concentration kills.
Two Days to Redeem. Unless You're Big.
Standard redemptions must be fulfilled within two business days. Compare that to Circle's current same-day USDC redemptions for institutional clients. Two days is slower — but it's also legally enforceable, which Circle's service-level agreement is not.
The catch: redemptions exceeding 10% of total outstanding supply in any 24-hour period trigger mandatory FDIC notification. The agency can grant extensions at its discretion. Translation: in a bank run, the FDIC can slow-walk your redemption. That's a feature, not a bug — it prevents a stablecoin death spiral from taking out the issuing bank.
$5 Million to Start, No Deposit Insurance for Holders
New stablecoin issuers need $5 million minimum capital for their first three years, composed entirely of Tier 1 equity. No Tier 2 instruments. Additionally, issuers must maintain a separate liquidity pool covering 12 months of operating expenses — completely separate from the 1:1 reserve.
The most important detail buried in the proposal: individual stablecoin holders do not receive pass-through FDIC deposit insurance. Only the issuer's reserve deposits qualify for the standard $250,000 coverage as corporate deposits. If you hold a bank-issued stablecoin and the issuer fails, you're a creditor in bankruptcy — not a depositor protected by the FDIC.
Fed Governor Michael Barr noted: "A great deal will depend on how federal and state regulators implement the statute." He's right. The GENIUS Act becomes effective January 18, 2027, or 120 days after final regulations — whichever comes later. Between now and then, the 60-day public comment period will determine whether these rules survive lobbying from banks that want looser reserve requirements and crypto firms that want faster redemptions.
For stablecoin users, the bottom line: bank-issued stablecoins will be the most regulated dollar tokens in crypto history. Whether "most regulated" means "safest" depends entirely on the final rules.