Fed lays out stablecoin application path for insured state member banks

The Federal Reserve Board published proposed application procedures on September 29 for insured State member banks seeking approval to have a subsidiary issue payment stablecoins under the GENIUS Act. The primary Federal Register notice sets the filing route for that category of institutions.

Comments are due November 30, 2026. The proposed rule would create a tailored application process for the bank — identified as the “applicant” — to obtain approval for its subsidiary’s stablecoin activity.

The Board frames the goal around both supervision and applicant cost. “The application process in the proposed rule is designed to enable the Board to effectively evaluate the safety and soundness of the applicant’s proposed activities based on the factors set out in the GENIUS Act, while minimizing unnecessary regulatory burden on applicants,” the proposal says.

The proposal’s stated balance is a formal approval route with a safety-and-soundness review, while the Board says it intends to limit unnecessary burden. The proposal is not itself an approval or authorization to issue; the Board would act on applications under the final rule.

The GENIUS Act requires the Board to promulgate rules for processing applications submitted under section 5. Enacted July 18, 2025, the Act generally prohibits anyone other than a Permitted Payment Stablecoin Issuer — a PPSI — from issuing a payment stablecoin in the United States.

The statute defines a payment stablecoin as a digital asset designed for payment or settlement where the issuer must convert, redeem or repurchase it for a fixed monetary value and maintain a stable value relative to that fixed value. Eligible issuers include a state-qualified issuer, a federal-qualified nonbank issuer, or a subsidiary of an insured depository institution, according to CryptoTimes’ account of the GENIUS Act framework.

For the bank entities covered by this notice, the consequence is concrete: an insured State member bank would have a defined Board approval channel if the proposal is finalized, but its subsidiary cannot treat the proposal itself as authorization to issue. The application still has to be submitted and evaluated under the final rules.

There’s also a statutory clock. The GENIUS Act takes effect on the earlier of 18 months after enactment or 120 days after primary Federal payment stablecoin regulators issue final implementing regulations. Eighteen months after July 18, 2025, lands on January 18, 2027. The alternative deadline is 120 days after the relevant final regulations, so the operative date depends on which event occurs first.

The Board is running two parallel rulemakings. Alongside the bank-application notice, it proposed broader regulations implementing other GENIUS Act provisions, including the section 4(a)(8) tying prohibition. That prohibition applies generally across the PPSI category, not only to subsidiaries of insured State member banks. Comments on that proposal are also due November 30, 2026.

The broader Federal Register notice states: “The Board is concurrently issuing a notice of proposed rulemaking seeking comment on its applications procedures applicable to insured State member banks seeking approval for a subsidiary to issue payment stablecoins.” The two notices connect the bank-subsidiary application channel with rules that reach the wider PPSI population.

The rulemaking follows earlier implementation steps. Treasury issued an advance notice of proposed rulemaking on September 18, 2025, and closed its public comment period on November 4, 2025. On December 2, 2025, FDIC Acting Chair Travis Hill said the FDIC expected to issue an application framework later that month and prudential rules early the following year. The Federal Reserve’s September 2026 proposal is the later, Board-specific process for its supervised institutions.

Implementation stays divided among agencies. The FDIC, Federal Reserve, Office of the Comptroller of the Currency and National Credit Union Administration each carry responsibilities under the GENIUS Act.

For prospective issuers, the immediate event is a proposed approval process, not a new stablecoin launch. November 30 is the next fixed date on the calendar.