The United States' dual-track regulation of stablecoins accelerates: An in-depth analysis of the FDIC draft

On April 7, 2026, the Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved a proposed rule establishing a comprehensive prudential framework for FDIC-regulated banks and their subsidiaries to issue payment stablecoins. This is the second supporting rule introduced by the FDIC under the GENIUS Act framework, following the draft application procedures submitted in December 2025, signaling that stablecoin regulation in the United States has officially moved from a “constitutional moment” to an “enforcement era.” Meanwhile, on April 3, the Treasury Department released judgment principles for a dual-track regime of state and federal regulation, and in addition, the comprehensive regulatory proposal launched by the OCC in February has further solidified the top-level design of U.S. stablecoin regulation.

Who Is Eligible to Issue Bank-Related Stablecoins

The FDIC draft makes clear that only FDIC-regulated insured depository institutions (IDIs) are eligible to issue payment stablecoins under the FDIC framework, through their established “Qualified Payment Stablecoin Issuers” (PPSI) subsidiaries. The draft applies to FDIC-regulated state non-member banks and state savings institutions. In December 2025, the FDIC proposed application procedure rules clarifying how banks should submit issuance applications to the FDIC and the list of materials required; this draft further supplements substantive operational requirements after approval, including reserves, redemptions, capital, liquidity, risk management, and information disclosure. Banks issuing PPSIs must still maintain their own prudent operational standards; capital, liquidity, and risk management at the parent-company level will not be weakened by the PPSI’s independent operations.

How 1:1 Reserves and T+2 Redemptions Are Implemented

The draft requires PPSIs to fully back circulating stablecoins at a ratio of at least 1:1 with high-quality liquid assets (such as cash or U.S. Treasuries). At any point in time, the value of reserve assets may not be lower than the total face value of stablecoins outstanding that have not been redeemed, and reserves must be held in segregated accounts, valued daily, and remain fully identifiable. If the same PPSI issues multiple stablecoins of different brands, in principle each brand must have its own segregated, traceable independent reserve pool, and reserves may not be freely mixed. With respect to redemptions, PPSIs must process most redemption requests within two business days, but withdrawals exceeding 10% in one day must be reported to the regulators.

Core Financial Constraints on Bank-Related Stablecoins

The draft sets clear financial thresholds for bank-related stablecoins. During the first three years of operation, a new PPSI’s minimum capital must not be lower than $5 million. In addition, PPSIs must maintain a liquidity buffer to cover operational expenses for the next 12 months. The draft explicitly prohibits paying stablecoin holders any form of interest or yield; PPSI reserve assets may not be used for lending, re-mortgaging, or high-risk activities, nor may reserve assets be commingled with the bank’s own funds. Stablecoins must be dedicated to payment and settlement functions, rather than existing as an interest-earning instrument.

Deposit Insurance: The Boundary Between Protected and Not Protected

In the draft, the FDIC clearly states that bank deposits used as reserves for stablecoins are treated as corporate deposits and do not enjoy pass-through deposit insurance for individuals. FDIC Chair Travis Hill has previously made clear that payment stablecoin holders are not eligible for FDIC deposit insurance, and issuers may not claim in their marketing that stablecoins are protected by the FDIC. At the same time, the FDIC updated its regulations to clarify that tokenized deposits meeting the conditions receive the same treatment as traditional deposits in the same category under the Federal Deposit Insurance Act. The substance of this distinction is: the reserve assets themselves are protected by deposit insurance at the level of the bank account, but this protection does not extend to the end holders of stablecoins.

Anti-Money Laundering and Sanctions Compliance Become Mandatory Obligations

On April 8, 2026, the Treasury Department, together with FinCEN and OFAC, issued a proposed rule to formally incorporate PPSIs into the category of “financial institutions” as defined by the Bank Secrecy Act. PPSIs must establish comprehensive anti-money laundering (AML) and counter-terrorist financing (CFT) programs, and have, at the technical level, the authority to intercept, freeze, and reject specific transactions. PPSIs must designate dedicated personnel residing in the United States to be responsible for the AML/CFT system; such personnel must have no criminal record for offenses such as insider trading, cybercrime, or financial fraud. The FDIC draft also requires PPSIs to establish a strong governance structure, cybersecurity defenses, and board-level oversight: they must publish monthly reserve reports, and those among issuers with a larger issuance of more than $5 billion must undergo an annual comprehensive audit.

How State and Federal Regulators Split Responsibilities

The draft released by the Treasury Department on April 3, 2026 establishes the core framework for dual state and federal regulation. Stablecoin issuers with total issuance not exceeding $10 billion may choose to accept state regulation, provided that the state’s regulatory framework is “substantially similar” to federal standards. The judgment criteria proposed by the Treasury Department are that the state framework must, in key areas such as reserves, AML compliance, and consumer protection, “meet or exceed” federal requirements. Once issuance exceeds $10 billion, regulatory authority will automatically shift to the federal level. This means that the dual-track system is not two completely independent parallel tracks, but a tiered system—small participants can operate under qualified state systems, but once they scale beyond a certain level, they must enter the federal regulatory framework.

What Dual-Track Regulation Means for the Industry Landscape

With the FDIC draft, the OCC proposal, and the Treasury’s dual-track framework rolling out in sequence, stablecoin issuance has moved from a regulatory gray area into a system of institutionalized “quasi-banking.” Large issuers, regardless of whether they choose a federal or a state path, will face strict capital constraints and information disclosure requirements. The entry threshold for bank-based issuers is clearly delineated, while non-bank issuers fall under OCC jurisdiction. In January 2026, the stablecoin single-month transfer volume reached $10.5 trillion, comparable to Mastercard’s annual fiat processing volume. In the flow of capital at this scale, the establishment of regulatory rules will directly affect the competitive landscape of payment infrastructure going forward. Once the rules are set, differentiated compliance costs will become a core consideration for issuers when choosing their regulatory path.

Summary

The FDIC’s stablecoin draft establishes a complete prudential regulatory framework for bank-related stablecoin issuance across six dimensions: reserves, redemptions, capital, liquidity, risk management, and information disclosure. The core requirements can be summarized as “1:1 reserves + T+2 redemptions + $5 million minimum capital + zero interest + no deposit insurance pass-through.” Parallel to this is the Treasury Department’s design of a state-federal dual-track system: state regulation can be chosen for issuances below $10 billion, and issuances above that automatically move into federal jurisdiction. As of April 13, 2026, the FDIC draft has entered a 60-day public consultation period; the final rules are expected to be implemented within 2026 and fully effective in 2027. For stablecoin issuers, the choice of regulatory path will depend on the fit between their own scale, compliance capabilities, and business strategy.

FAQ

Q: Does the FDIC draft mean stablecoin holders can enjoy deposit insurance?

A: No. The FDIC clarifies that payment stablecoin reserves are treated as corporate deposits and do not enjoy pass-through deposit insurance for individuals, and issuers may not claim in their marketing that stablecoins are protected by the FDIC.

Q: Is the $5 million minimum capital a hard requirement for all stablecoin issuers?

A: This requirement applies to newly established PPSI subsidiaries under the FDIC-regulated framework, which must meet it during their first three years of operation. Non-bank issuers (such as federally licensed non-bank issuers under OCC jurisdiction) are subject to different capital standards.

Q: If the issuance of stablecoins exceeds $10 billion, will they definitely be taken over and regulated by the federal government?

A: Yes. Under the Treasury’s dual-track design, once issuance breaks through $10 billion, regulatory authority will automatically transfer from the state level to the federal level.

Q: When does the dual-track regulatory system officially take effect?

A: The FDIC draft is currently in a 60-day public comment period (as of early June 2026). The final rules are expected to be implemented within 2026. The GENIUS Act will become fully effective on January 18, 2027, or 120 days after the final implementation rules are published, whichever is earlier.