#What is the Proposed Rule for Stablecoin Issuance?
The FDIC has put forward a new regulatory framework designed to govern banks that want to issue payment stablecoins through their subsidiaries. Under this proposed rule, only stablecoin issuers authorized by the federal government will be allowed to operate in the United States. This initiative is part of the implementation of the GENIUS Act, which aims to bring clarity and structure to the stablecoin market.
#How Will the Application Process Work?
The proposed framework introduces a specific application process tailored for banks and their subsidiaries wishing to issue stablecoins. Institutions will need to submit an application to the FDIC that includes financial details concerning the subsidiary and any additional information requested by the agency.
The FDIC will evaluate these applications based on key criteria such as financial stability, quality of management, and compliance with regulations. Once an application is submitted, the FDIC has 30 days to determine whether it is complete. A decision on approval or denial must be made within 120 days, and if denied, applicants will receive a written explanation of the reasons behind the decision.
#What Are the Appeals and Timeframe?
If an application is denied, applicants have the right to appeal through a formal hearing request within 30 days. The FDIC then has up to 60 days to make a final determination on the appeal.
The proposed regulation also provides a temporary safe harbor for applications filed before the official effective date of the GENIUS Act. This provision allows applicants to waive certain statutory requirements for a period of up to 12 months.
As part of the process, the FDIC is currently inviting public comment regarding the information-collection requirements of this proposed rule. This engagement with the public is crucial as it shapes the future of stablecoin issuance and regulation.