December 16, 2025 — The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved a proposed rule establishing a specific application process for FDIC-regulated financial institutions to issue payment stablecoins through subsidiaries. This move is widely seen as the first major implementation step following the signing of the GENIUS Act into law in July.
At the heart of the regulatory framework is the creation of a "Permitted Payment Stablecoin Issuer" (PPSI) designation for stablecoin issuers. Banks must establish dedicated subsidiaries for stablecoin operations, ensuring these activities are managed separately from traditional banking business.
01 Regulatory Developments
The FDIC’s action on December 16, 2025, marks a significant step forward in US digital currency regulation. The Board’s approval of the proposed rule provides a clear application pathway for financial institutions to issue payment stablecoins via subsidiaries.
This proposal represents the first major step in implementing the GENIUS Act, signed into law by President Trump in July.
According to FDIC Acting Chairman Travis Hill’s remarks at the Board meeting, the proposed rule will enable the FDIC to evaluate the safety and soundness of payment stablecoin activities planned by applicant institutions, while minimizing regulatory burden for applicants.
02 Key Provisions of the GENIUS Act
The GENIUS Act (short for the "Guiding and Establishing National Innovation in US Stablecoins Act") establishes a federal regulatory framework for stablecoin issuance within the United States.
Core requirements include: stablecoins must be fully backed by US dollars or similarly liquid assets, and issuers with a market capitalization exceeding $50 billion are subject to annual audits.
The Act clearly delineates regulatory responsibilities. The FDIC serves as the primary federal regulator for payment stablecoins, overseeing insured depository institutions that issue stablecoins through subsidiaries.
FDIC Legal Counsel Nicholas Simmons noted that applicants must provide a detailed description of the proposed business scope, disclose the "ownership and control structure of the subsidiary," and submit an "engagement letter with a registered public accounting firm."
03 Application Process and the 120-Day Rule
Under the FDIC’s new framework, banks seeking to issue stablecoins must follow a structured approval process. The most notable provision is the "120-day automatic approval mechanism," which grants automatic approval if the FDIC takes no action within 120 days of receiving a complete application.
This mechanism is designed to prevent regulatory delays and provide greater certainty for financial institutions.
Applicants must submit comprehensive materials to the FDIC, outlining the scope of their planned stablecoin activities, the subsidiary’s ownership and control structure, and an engagement letter with a registered accounting firm.
The FDIC will evaluate applications based on statutory factors, focusing on the safety and soundness of the proposed activities.
04 Stringent Requirements for Bank-Issued Stablecoins
Unlike existing stablecoins in the market, bank-issued stablecoins will face much stricter capital, liquidity, and reserve requirements. According to the FDIC framework, banks issuing stablecoins must hold capital in excess of minimum standards for traditional deposit operations to address new risks posed by blockchain payment systems.
Reserve management requires banks to maintain a 1:1 ratio of US dollar assets to circulating tokens, ensuring full collateralization at all times.
Acceptable reserve assets include cash balances at Federal Reserve banks, short-term Treasury securities, and other high-liquidity, low-risk financial instruments approved by regulators. This reserve structure aims to eliminate the risks of partial collateralization, making bank-issued stablecoins more robust than decentralized alternatives.
Banks must also maintain sufficient liquidity buffers to meet user redemption demands and ensure stable, continuous operations.
05 Regulatory Roadmap Ahead
Acting Chairman Travis Hill revealed that the FDIC plans to issue another proposed rule in the coming months, setting capital, liquidity, and risk management requirements for approved subsidiary stablecoin issuers.
This series of regulatory measures demonstrates that the US is systematically building a stablecoin regulatory environment that both protects consumers and fosters innovation.
The FDIC stated it will continue to explore regulatory clarity for broader digital asset and tokenized deposit activities. The public comment period for the proposed rule will last 60 days, after which the FDIC will review all feedback and issue a final rule.
06 Impact on the Existing Stablecoin Market
The FDIC’s new framework could have far-reaching effects on the current stablecoin market. Today, leading stablecoins such as USDC (USD Coin) and DAI have already established significant market positions.
As of December 15, 2025, USDC’s market capitalization reached approximately $78.4 billion, with its price remaining stable at around $1. DAI, the largest decentralized stablecoin on Ethereum, had a market cap of about $4.35 billion, with its price hovering near $0.99908.
Bank entry into the stablecoin market may reshape the competitive landscape. Bank-issued stablecoins offer clear regulatory oversight, reserve funds backed by deposit insurance, and seamless integration with banking infrastructure. These advantages could attract institutions and individual users who remain cautious about existing stablecoins.
At the same time, the new framework presents fresh opportunities for trading platforms like Gate. Stablecoin products such as GUSD traded on Gate may need to reassess their positioning and competitive edge in an increasingly regulated market.
07 Opportunities and Challenges
The path for banks to issue stablecoins presents both opportunities and challenges. For traditional banks, entering the stablecoin space means participating in the rapidly growing digital asset market, developing new revenue streams, and strengthening their role in the payments ecosystem.
For consumers and institutional users, bank-issued stablecoins may offer greater safety and regulatory assurance, particularly regarding reserve transparency and redemption guarantees.
Banks must also demonstrate a deep understanding of blockchain infrastructure, reserve management rules, and risk controls that go beyond traditional banking operations during the application process.
Additionally, banks will need to face competition from existing stablecoin issuers and adapt to a rapidly evolving technological landscape.
Outlook
As of December 17, 2025, GUSD was trading at $0.9997 on Gate, with a 24-hour increase of 0.04% and a circulating market cap of roughly $197 million. Meanwhile, leading decentralized stablecoin DAI traded at approximately $0.99908 on the same day.
The FDIC’s stablecoin framework is now open for public comment, and the countdown has begun for traditional banks’ official entry into the digital currency sector. Whatever the outcome, this transformation is set to redefine the nature and future of money.
