FDIC to Stablecoins: Show Us the Money, 1:1-Style—Or Else

The FDIC decided to play financial hall monitor on April 7, 2026, dropping proposed rules for bank-affiliated stablecoin issuers operating under the GENIUS Act. The proposal covers reserves, redemption timelines, capital requirements, and risk management—all the glamorous stuff that makes compliance lawyers rich.

Here's the rundown, straight from the regulatory playbook:

The Basics

Permitted payment stablecoin issuers (PPSIs)—which are basically subsidiaries of FDIC-supervised banks acting as very serious financial babysitters—must maintain 1:1 reserves backing every stablecoin in circulation. The fair or face value of reserves must always equal or exceed the total par value of outstanding coins. No fractional reserve nonsense here. This isn't a casino; it's a really well-organized vault.

Reserves get monitored daily and kept in a locked box, completely separate from the issuer's other assets. Think of it as a "don't touch this" fund, but with official regulatory backing and significantly more paperwork.

What's Actually in the Reserve Box?

Eligible assets are limited to boring, ultra-safe instruments—the financial equivalent of eating your vegetables:

• U.S. coins and currency
• Balances at Federal Reserve Banks
• Demand deposits at insured banks
• U.S. Treasury securities with 93 days or less to maturity
• Overnight repurchase agreements
• Overnight reverse repos collateralized by eligible Treasuries
• Money market fund shares invested exclusively in the above

Counterparty exposure? Capped at 40% of total reserves. Translation: no wildcatting into risky DeFi protocols or whatever yield-farming nonsense the degens are into this week.

Redemption: Two Days, Period.

PPSIs must publish a redemption policy and honor requests within two business days. For those feeling extra ambitious and redeeming more than 10% of outstanding coins in a 24-hour window, FDIC notification is required. Extensions are possible—probably accompanied by a strongly worded letter and significant sighing on the phone.

Capital Requirements

New PPSIs need $5 million minimum capital for their first three years, or more if regulators feel generous that particular afternoon. Ongoing capital must be Common Equity Tier 1 and Additional Tier 1 only—no Tier 2 funny business allowed. Parent banks must deconsolidate PPSI subsidiaries for capital calculations, because apparently mixing stablecoin reserves with regular bank math was too simple.

Additionally, PPSIs must maintain a separate pool of highly liquid assets equal to 12 months of operating expenses. That's on top of the 1:1 reserve pool. Double the fun. Double the compliance costs. Triple the lawyer fees.

Failure to meet requirements? Expect a lovely call from the FDIC and a suspension of new issuance, like having your credit card declined but for your entire business