GENIUS Act: FDIC, NCUA, OCC Proposals for Applications, Prudential Frameworks

The Federal Payment Stablecoin Regulators – defined by the GENIUS Act to include the FDIC, OCC, FRB, and NCUA – are separately issuing proposed rules to implement certain provisions of the law applicable to the insured depository institutions (IDIs) and permitted payment stablecoin issuers (PPSIs - again, as defined in the GENIUS Act) under their jurisdictions.

Recent releases include proposals from:

• OCC and NCUA, outlining application and licensing requirements for IDIs and PPSIs including content, form, and review factors. (Note: The FDIC previously released a similar proposal.)
• OCC and FDIC, outlining prudential regulatory requirements for IDIs and PPSIs across a variety of areas such as reserve assets, capital, liquidity, and custodial services.

The GENIUS Act mandates that final implementing rules be issued by July 18, 2026.  The GENIUS Act goes into effect January 18, 2027, or 120 days after the primary Federal Payment Stablecoin Regulators (FDIC, FRB, NCUA, OCC) issue final implementing regulations. No proposals have yet been released by the FRB regarding applications or prudential frameworks under the GENIUS Act.   

Requirements directed toward PPSIs related to BSA/AML/CFT and sanctions compliance are covered in a joint release from FinCEN and OFAC (see KPMG Regulatory Alert, here).

Application and Licensing Requirements

Proposals from the OCC and NCUA outline application and licensing requirements for entities under their jurisdictions (IDIs and other entities) and PPSIs, including content, form, and review factors. The FDIC previously released a similar proposal (see KPMG Regulatory Alert, here).

Office of the Comptroller of the Currency

Scope. The proposed application/licensing procedures are applicable to insured national banks, federal savings associations, and insured federal branches that seek to establish subsidiaries to issue payment stablecoins as well as to nonbank entities, uninsured national banks (e.g., trust banks), and uninsured federal branches that seek to issue payment stablecoins as federal qualified stablecoin issuers. Once approved, the entities would become PPSIs under the supervision of the OCC. Foreign payment stablecoin issuers (FPSIs) that meet certain conditions and register with the OCC would be permitted to issue and/or trade their payment stablecoins in the United States.

Application/Licensing.  Under the proposal, applicants would be required to submit all information requested in a form to be maintained on the OCC website (though information details are not included in the proposal.) Each director, executive officer, and principal shareholder of the applicant (or in the case of an applicant that is an insured national bank, federal savings association or federal branch, of the subsidiary of the applicant) would be required to submit the information prescribed in the Interagency Biographical and Financial Report. The application must include a certification that the information provided does not contain any “material misrepresentations or omissions.”

Review. Consistent with the FDIC, the OCC would consider the statutory factors when evaluating whether an application is “substantially complete:”

• Ability, based on financial condition and resources, to meet the substantive requirements for issuing payment stablecoins.
• Whether the officers or directors have been convicted of certain felonies, such as insider trading, embezzlement, cybercrime, money laundering, financing of terrorism or financial fraud.
• Competence, experience and integrity of relevant officers, directors and principal shareholders, including their compliance record and ability to fulfill OCC-imposed commitments or conditions.
• Whether the redemption policy meets the rule requirements.

Processing. Again, consistent with the FDIC, the OCC would notify applicants not later than 30 days after receipt of an application whether the application is “substantially complete,” and thereafter is deemed approved as of the 120th day after receiving the “substantially complete” application unless denied based on the OCC’s review of the factors finds the activities would unsafe and unsound.

Safe Harbor. Entities with substantially complete applications pending as of the effective date of the GENIUS Act, may request in writing that the OCC grant a waiver of the approval requirements for up to 12 months after the effective date.

FPSIs. Foreign payment stablecoin issuers would be required to: i) be subject to a “comparable” supervisory and regulatory regime, ii) is not domiciled or regulated in a country subject to “comprehensive economic sanctions” by the U.S. or designated a “primary money laundering concern,” iii) register with the OCC through an application process as outlined in the proposal, and iv) hold sufficient reserves to meet liquidity demands of U.S customers. FPSIs would be subject to the same reporting, supervision and examination requirements for domestic PPSIs.

National Credit Union Administration

Scope. The NCUA’s application procedures are applicable to federally insured credit unions (FICUs), including state-chartered credit unions, that seek approval/licensure to establish a subsidiary to issue payment stablecoins. Once approved, the subsidiary would become a PPSI under the supervision of the NCUA. The proposal would also limit FICUs to investing only in NCUA-licensed PPSIs.

Application/Review/Process. The NCUA proposal generally follows the approach to the application process followed by the FDIC and OCC, including submission of information on the PPSI’s proposed activities (i.e., business plan) as well as on its directors, officers, and shareholders; evaluation based on the statutory review factors; the processing timeframes for approval and/or denial; and the safe harbor. Key items unique to the NCUA application and licensing process include:

• Joint Application and Approval: The FICU (as the “parent company”) and the FICU subsidiary (the proposed PPSI) must jointly file the application (rather than just the FICU/IDI). With the application, the parent company and proposed PPSI must:
  • Certify, along with any principal shareholders, that the information submitted does not contain “material misrepresentations or omissions.”
  • Provide information on the competence, experience, and integrity of the directors, officers and principal shareholders of the parent company and the proposed PPSI.
• Multiple Parent Companies: The NCUA anticipates that more than one FICU may invest in the same proposed PPSI resulting in the potential for multiple parent companies; the proposed rule would generally define a “parent company” as an FICU that owns, controls or holds the power to vote 10 percent or more of any class of voting securities, or has the ability to direct the management or policies of a PPSI.
• New Guidance: To facilitate compliance with the regulations, the NCUA intends to issue the NCUA Payment Stablecoin Licensing Manual, guidance to help develop business plans, and the NCUA Biographical and Financial Report, which is intended to be similar to the Interagency Biographical and Financial Report.

Prudential Regulatory Requirements

In each of their proposed supervisory frameworks, the OCC and FDIC issue common requirements for PPSIs across various categories included in the table below. Details of the agencies’ individual approaches and questions may vary.

Office of the Comptroller of the Currency. Additional provisions unique to the OCC’s proposal include provisions to address:

• Transition of State PPSIs. PPSIs that are state qualified payment stablecoin issuers with an outstanding issuance value of more than $10 billion would be required to transition to OCC oversight within 360 days of crossing the threshold and to notify the OCC within five calendar days after the transition threshold is triggered. State qualified payment stablecoin issuers could request a waiver if they seek to remain supervised solely by the applicable State regulator. (See related KPMG Regulatory Alert here.)
• Fees Related to Custody and Safekeeping. OCC would impose a special assessment on any entity subject to semiannual assessments—including all PPSIs—for which 50 percent or more of their interest and non-interest income is derived from custodial or safekeeping activities under the GENIUS Act. The new assessment would be comprised of minimum fee (not specified in the proposal), an additional marginal rate for entities with more than $1 billion in assets related to their GENIUS Act custodial activities, and a potential surcharge for issuers in need of rehabilitation.  

Federal Deposit Insurance Corporation. Additional provisions unique to the FDIC’s proposal include provisions to address:

• Deposit Insurance. Clarifying that deposits held as reserves for a payment stablecoin would be insured as corporate deposits of the PPSI but would not be insured on a pass-through basis to the payment stablecoin holder (customer). Further, the proposal would clarify that tokenized deposits are deemed deposits for purposes of deposit insurance.
• Prohibitions. Adding a prohibition against providing credit to a customer to purchase payment stablecoins.