On April 7, the Federal Deposit Insurance Corporation (the “FDIC”) issued a notice of proposed rulemaking (the “FDIC NPR”)[1] to implement provisions of the “Guiding and Establishing National Innovation for U.S. Stablecoins Act” or the “GENIUS Act.”[2] The FDIC NPR proposes requirements that would apply to FDIC-supervised permitted payment stablecoin issuers (“PPSIs”), which in all cases would be subsidiaries of FDIC-supervised insured depository institutions (“IDIs”). The FDIC also proposes clarifications to its deposit insurance regulations, including that deposits held as reserves for a payment stablecoin would not be insured on a pass-through basis. The FDIC NPR also sets forth updates to the FDIC’s regulations to provide that the technology or recordkeeping used by an IDI to record its deposit liabilities does not affect whether those liabilities constitute “deposits.” This update would clarify that a tokenized deposit that meets the statutory definition of “deposit” under the Federal Deposit Insurance Act (the “FDI Act”) is a deposit and is treated no differently under the FDI Act than other forms of deposits.

In addition, on April 3, the U.S. Department of the Treasury issued a notice of proposed rulemaking (the “Treasury NPR”) to establish broad-based principles for determining whether a state-level regulatory regime is substantially similar to the federal regulatory framework established under the GENIUS Act.[3] Under the GENIUS Act, a PPSI that is a State qualified payment stablecoin issuer may opt for regulation under a state-level regulatory regime only if that regime is “substantially similar” to the federal regulatory framework, subject to certain qualifications.[4]

FDIC NPR

GENIUS Act Implementation

Under the GENIUS Act, depending on the type of entity and the value of the payment stablecoins it has issued, an entity may be approved, and then regulated and supervised, by either a federal or state regulator (or both). The FDIC is the primary federal regulator of PPSIs that are subsidiaries of FDIC-supervised IDIs.[5] The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the National Credit Union Administration are similarly the primary federal regulators of PPSIs that are subsidiaries, respectively, of OCC-supervised, Federal Reserve Board-supervised and NCUA-supervised IDIs. The OCC is also the primary federal regulator of PPSIs that are federally licensed nonbank entities, uninsured national banks and federal branches of foreign banks. In December 2025, the FDIC proposed application requirements for FDIC-supervised IDIs that seek to issue payment stablecoins through a PPSI subsidiary.[6] In the FDIC NPR, the FDIC is proposing requirements that would apply to FDIC-supervised PPSIs, as well as FDIC-supervised institutions that provide custody services for payment stablecoin reserves and related assets.

The FDIC NPR is generally aligned with the notice of proposed rulemaking issued by the OCC in February 2026.[7] The FDIC states that it has “endeavored, in many areas, to align this proposed rule with the OCC’s proposed rule, to the extent relevant.”[8] However, the FDIC NPR diverges from the OCC proposal in some areas, including:

• Reserve Asset Diversification. To implement the GENIUS Act’s reserve asset diversification requirement,[9] the FDIC proposes that a PPSI would be subject to a requirement that it hold no more than 40 percent of its reserve assets, regardless of type, at any single eligible financial institution.[10] The OCC proposed to implement a similar 40 percent limit, but also proposed other diversification standards, as well as requirements regarding the weighted average maturity of a PPSI’s aggregate reserve assets and the minimum amount of reserve assets that must be held as insured deposits by large PPSIs.[11] Moreover, the OCC requested comment on whether it should implement reserve asset diversification and maturity requirements as either binding requirements (similar to the FDIC’s proposal for the reserve asset diversification requirement) or as a less prescriptive safe harbor.[12]
• Multiple Brands of Stablecoins. The GENIUS Act does not address whether a PPSI may issue multiple brands or series of payment stablecoins (g., white-label payment stablecoins). The FDIC proposed rule includes express provisions that suggest that this activity is permissible and proposes mechanisms for protecting the holders of different brands.[13] The OCC did not include any provisions suggesting that this activity should or should not be permissible, instead noting the advantages and disadvantages of an issuer being able to issue multiple brands. Both agencies, however, request comment on whether to prohibit a PPSI from issuing more than one brand of payment stablecoin out of the same authorized entity.[14]
• Discretionary Consequences. The FDIC and OCC diverge in the consequences of a PPSI (i) failing to maintain reserves for its payment stablecoins on a one-to-one basis, as required by the GENIUS Act;[15] (ii) failing to satisfy minimum capital or operational backstop requirements;[16] or (iii) experiencing significant redemptions.[17] The FDIC would require a PPSI to notify the agency, and the FDIC would exercise its discretion to determine appropriate consequences for the PPSI. The OCC proposal would impose mandatory consequences on a PPSI in these circumstances; depending on which requirement the PPSI fails to meet, the OCC would prohibit a PPSI from issuing any new payment stablecoins, require a PPSI to begin liquidation of its reserve assets, or require a PPSI to extend its redemption period.
• Other Requirements. The FDIC’s proposed rule does not include certain other requirements proposed by the OCC, including a prior notice requirement applicable to any person seeking to acquire control of a PPSI.[18]

Additionally, in the FDIC NPR, the FDIC proposes to amend its deposit insurance regulations to clarify that reserve assets held as deposits at an IDI are corporate deposits of a PPSI. This change would apply to any federally regulated or State-regulated PPSI, and would result in these deposits being ineligible to be insured to payment stablecoin holders on a pass-through basis. Reserve assets of a PPSI held as deposits at a single IDI would therefore be aggregated with other corporate deposits of the PPSI at the same IDI and insured for up to the standard deposit insurance coverage limit (currently, $250,000).[19]

Treatment of Tokenized Deposits

The FDIC would amend the deposit insurance regulations to clarify that the definition of “deposit” under Section 3(l) of the FDI Act is “technology neutral” and, therefore, tokenized products[20] that meet the statutory definition of “deposit” are deposits under the FDI Act, regardless of the technology or recordkeeping used by an IDI to record the deposit liabilities.[21]

The FDIC would effectuate this principle by amending its definition of “deposit account records” for purposes of the deposit insurance coverage regulations[22] to provide expressly that an IDI’s choice of technology or recordkeeping used to record deposit liabilities is not determinative of the FDIC’s determination of the availability of deposit insurance.[23] The FDIC explains that the intent of this amendment would be to “accommodate institutions’ potential use of technology, including blockchain and distributed ledger infrastructures, for purposes of recording deposit liabilities.”[24] In his remarks on the FDIC NPR, FDIC Chairman Travis Hill indicated that there may be “many other” questions related to tokenized deposits beyond those addressed in the proposal, and encouraged comments on other forms of clarity or guidance the FDIC should consider providing.[25]

The FDIC requests comments on all aspects of the NPR, including on 144 specific questions. Comments on the FDIC NPR are due on June 2, 2026.

Treasury NPR

Under the GENIUS Act, a PPSI that is a State qualified payment stablecoin issuer may opt to be regulated under a state-level regulatory regime that (i) is “substantially similar” to the federal regulatory framework under the GENIUS Act and (ii) has obtained a unanimous determination by the Stablecoin Certification Review Committee[26] that it “meets or exceeds” the standards and requirements in Section 4(a) of the GENIUS Act.[27] Section 4(a) sets out the principal standards that PPSIs must comply with under the GENIUS Act in respect of payment stablecoins they issue, including limitations on permissible reserve assets and activities; redemption policy and publication requirements; capital, liquidity and risk management requirements; Bank Secrecy Act and sanctions compliance requirements; and prohibitions on rehypothecation of reserve assets, the use of deceptive names, tying arrangements and payments of interest or yield to a payment stablecoin holder.[28]

The GENIUS Act requires the Treasury Department to establish “broad-based principles” for determining whether a state-level regulatory regime is substantially similar to the federal regulatory framework under the GENIUS Act.[29] To implement this direction, the Treasury Department is proposing regulations providing that, in comparing a state-level regulatory regime to the federal regulatory framework under the GENIUS Act, the comparison would be with the federal regulatory framework proposed to be implemented by the OCC (except with respect to tying restrictions and the treatment of a PPSI under the Bank Secrecy Act and sanctions laws, in which cases the comparison would be to the implementing regulations of the GENIUS Act established by the Federal Reserve Board and the Treasury Department, respectively).[30]

The extent to which a state may deviate from that framework would differ based on the type of requirement under the GENIUS Act: (1) with respect to requirements under Section 4(a) for which the GENIUS Act does not grant substantive discretion to a state payment stablecoin regulator, implementation must be consistent with the federal regulatory framework in all substantive respects;[31](2) with respect to requirements under Section 4(a) of the GENIUS Act for which the GENIUS Act does grant substantive discretion to a state payment stablecoin regulator to develop state regulatory regimes, implementation must be consistent with the applicable provisions of the GENIUS Act;[32] and (3) with respect to requirements under other relevant provisions of the GENIUS Act for which a state payment stablecoin regulator has significant flexibility (such as supervision and enforcement requirements, insolvency requirements and application and approval requirements), implementation must be “similar to” and “consistent with” the federal regulatory framework.[33] The Treasury Department clarifies that a state-level regulatory regime is not necessarily restricted from imposing requirements that are more stringent than those applicable under the federal regulatory framework.[34]

The Treasury Department requests comments on all aspects of the NPR, including on 78 specific questions. Comments on the Treasury NPR are due on June 2, 2026.

ENDNOTES

[1] FDIC, GENIUS Act Requirements and Standards for FDIC-Supervised Permitted Payment Stablecoin Issuers and Insured Depository Institutions, Notice of Proposed Rulemaking, 91 Fed. Reg. 18,534 (Apr. 10, 2026).

[2] Pub. L. No. 119-27, 139 Stat. 419 (2025).

[3] U.S. Department of the Treasury, GENIUS Act Broad-Based Principles for Determining Whether a State-level Regulatory Regime is Substantially Similar to the Federal Regulatory Framework, Notice of Proposed Rulemaking, 91 Fed. Reg. 16,844 (Apr. 3, 2026).

[4] A State qualified payment stablecoin issuer means an entity that (A) is legally established under the laws of a state and approved to issue payment stablecoins by a state payment stablecoin regulator; and (B) is not an uninsured national bank, a federal branch, an IDI, or a subsidiary of an IDI. 12 U.S.C. § 5901(31).

[5] The Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System are the primary federal regulators of PPSIs that are subsidiaries, respectively, of OCC-supervised and Federal Reserve Board-supervised IDIs. The OCC is also the primary federal regulator of PPSIs that are federally licensed nonbank entities, uninsured national banks and federal branches of foreign banks.

[6] See FDIC, Approval Requirements for Issuance of Payment Stablecoins by Subsidiaries of FDIC-Supervised Insured Depository Institutions, 90 Fed. Reg. 59,409 (Dec. 19, 2025).

[7] For details on the OCC’s proposed rule, please refer to our Memorandum to Clients, published on March 11, 2026.

[8] FDIC NPR, at 18,535.

[9] 12 U.S.C. § 5903(a)(4)(A)(iii).

[10] FDIC NPR, Proposed § 350.4(f).

[11] OCC, Implementing the Guiding and Establishing National Innovation for U.S. Stablecoins Act for the Issuance of Stablecoins by Entities Subject to the Jurisdiction of the Office of the Comptroller of the Currency, Notice of Proposed Rulemaking, 91 Fed. Reg. 10,202 (Mar. 2, 2026), Proposed § 15.11(c) [hereinafter OCC NPR].

[12] Id. at 10,255–56.

[13] FDIC NPR, at 18,541.

[14] Id.; OCC NPR, at 10,213 (also suggesting a streamlined process for approving applications to become a PPSI if an affiliate has already been approved).

[15] Compare FDIC NPR, Proposed § 350.4(i), with OCC NPR, Proposed § 15.11(g)(2), (3).

[16] Compare FDIC NPR, Proposed § 350.9(c)(2), with OCC NPR, Proposed § 15.41(c)(3).

[17] Compare FDIC NPR, Proposed § 350.5(c), with OCC NPR, Proposed § 15.12(c).

[18] See OCC NPR, Proposed § 15.14(m) (change in control).

[19] FDIC NPR, at 18,558–59; Proposed § 330.11(a)(3).

[20] The FDIC clarifies that the term “tokenized deposit” generally refers to a tokenized form of an IDI’s deposit liability recorded in an on-chain or off-chain account enabled with distributed ledger technology. The FDIC acknowledges that the terms “tokenized deposit” and “deposit token” (which the FDIC describes as “more digitally native without a credit in a corresponding account”) are sometimes used interchangeably but that, for purposes of the proposal, “tokenized deposit” is intended as a general term to include “deposit token.” Id. at 18,534, n.3.

[21] FDIC NPR, at 18,560; Proposed §§ 330.1(e), 330.3(k).

[22] 12 C.F.R. Part 330.

[23] FDIC NPR, Proposed §§ 330.1(e), 330.3(k).

[24] Id. at 18,560.

[25] Statement by Chairman Travis Hill on the Proposal to Implement the GENIUS Act (Apr. 7, 2026).

[26] The Stablecoin Certification Review Committee is composed of the Secretary of the Treasury, the Chair of the Federal Reserve Board (or the Vice Chair for Supervision of the Federal Reserve Board, if so delegated by the Chair of the Federal Reserve Board) and the Chairman of the FDIC. 12 U.S.C. § 5901(27).

[27] Id. § 5903(c). Only State qualified payment stablecoin issuers with a consolidated total outstanding issuance of payment stablecoins of not more than $10 billion may opt for State regulation. Id. § 5903(c)(1).

[28] Id. § 5903(a).

[29] Id. § 5903(c)(2).

[30] Treasury NPR, Proposed § 1521.1(c).

[31] Id., Proposed § 1521.2(b)(1)(i). With respect to these requirements, there must be no material deviations in definitions or interpretations of statutory terms and each of the requirements must be applied and construed in a manner that does not materially narrow, condition or limit its scope compared to the federal regulatory framework. Id.

[32] Id., Proposed § 1521.2(b)(1)(ii). These requirements must also lead to “regulatory outcomes that are at least as stringent and protective as the Federal regulatory framework.” Id. The Treasury NPR outlines specific expectations with respect to each of these requirements. Id., Proposed § 1521.4.

[33] Treasury NPR, Proposed § 1521.5. With respect to these requirements, the state regulatory regime would not necessarily need to “meet or exceed” the federal regulatory framework. Id.

[34] See id., at 16,848–49.

This post is based on a Sullivan & Cromwell LLP memorandum, “GENIUS Act Implementation,” dated April 10, 2026, and available here.