FDIC Drops the GENIUS Act Homework: Banks Must Keep Stablecoins on a Tight Leash with 1:1 Reserves and 2-Day Redemption Promise

The FDIC just fired off another round of rulemaking for stablecoin issuers, and this one doesn't mess around. It's giving "strict parent energy" to anyone who thought they could run a algorithmic stablecoin fantasy operation through a bank charter.

On April 7, 2026, the agency approved a notice of proposed rulemaking laying out reserve, redemption, capital, and risk management requirements for bank-affiliated stablecoin issuers operating under the GENIUS Act. Think of it as the FDIC's answer to "but what if I promise to be good?"

The Drill

Permitted payment stablecoin issuers must hold 1:1 reserves in eligible assets at all times. We're talking U.S. coins and currency, Fed Reserve balances, demand deposits at insured banks, short-term U.S. Treasuries, overnight repos, and money market fund shares in qualifying assets. Those reserves get monitored daily and kept segregated from the issuer's other holdings. It's basically a digital piggy bank that only accepts boring government money and Treasury bonds—the least exciting portfolio known to humanity.

Counterparty exposure is capped at 40% of total reserves. And on redemption, issuers must publicly disclose their policy and generally cash out within two business days. For large redemptions exceeding 10% of outstanding issuance in any 24-hour window, issuers must notify the FDIC and can request an extension. Because apparently, even in crypto, you still need to ask permission before doing anything interesting.

Capital Call

New entrants face a $5 million minimum capital requirement for their first three years. Ongoing capital must be common equity tier 1 and additional tier 1 instruments only—Tier 2 is out. Parent banks must deconsolidate PPSI subsidiaries for regulatory capital purposes. No subordinated debt trickery allowed here, folks.

There's also a separate operational backstop: a pool of highly liquid assets equal to 12 months of total operating expenses, independent of the 1:1 reserve pool. Because even your stablecoin desk needs an emergency fund for when the lights stay on.

Cybersecurity Gets Real

Issuers must maintain comprehensive IT frameworks covering smart contract controls, private-key management, blockchain monitoring, incident response, and independent testing. Annual AML/CFT program certifications are on the menu too. The FDIC basically said "show us your multisig, show us your cold storage, and for the love of God, prove your smart contracts aren't written by someone who learned Solidity from a two-hour YouTube video."

Insurance Gotchas

Deposits held as PPSI reserves are insured only as corporate deposits of the PPSI itself—up to the standard $250,000 limit. No pass-through coverage for individual stablecoin holders. That's the GENIUS Act doing its thing. Your "stable