Will banks issue stablecoins? FDIC new regulations drive transformation of the US financial system

December 16, 2025, the Federal Deposit Insurance Corporation (FDIC) Board of Directors approved a proposed rule establishing a specific application process for regulated financial institutions to issue payment stablecoins through subsidiaries. This move is seen as the first significant implementation step following the signing into law of the GENIUS Act in July this year.

The core of the regulatory framework is to establish the identity of “Licensed Payment Stablecoin Issuers” (PPSI), requiring banks to set up dedicated subsidiaries to segregate stablecoin operations from traditional banking activities.

01 New Regulatory Developments

The FDIC’s action on December 16, 2025, marks a substantial step forward in the United States’ digital currency regulation. The proposed rule approved by the agency’s board outlines a clear application pathway for financial institutions to issue payment stablecoins through subsidiaries.

This proposal is the first major step in implementing the GENIUS Act, signed into law by President Trump in July this year.

According to FDIC Acting Chairman Travis Hill during the board meeting, the proposed rule will allow the FDIC to assess the safety and soundness of the payment stablecoin activities planned by applicant institutions while minimizing regulatory burdens on applicants.

02 Core Provisions of the GENIUS Act

The GENIUS Act (full name: “Guiding and Establishing a National Innovation Framework for U.S. Stablecoins”) establishes a federal regulatory framework for stablecoin issuance within the United States.

Key requirements of the act include: stablecoins must be fully backed by USD or similar liquid assets, and issuers with a market cap exceeding $50 billion are subject to annual audits.

The act clearly delineates regulatory responsibilities, with the FDIC serving as the primary federal regulator for payment stablecoins, overseeing deposit-taking institutions that issue stablecoins through subsidiaries.

FDIC Legal Counsel Nicholas Simons noted that applicants need to provide detailed descriptions of their proposed business scope, including “ownership and control structures of subsidiaries,” and submit “a letter of engagement with a registered public accounting firm.”

03 Application Process and the 120-Day Rule

Under the new framework proposed by the FDIC, banks seeking to issue stablecoins must follow a structured approval process. The most notable regulation is the “120-day automatic approval mechanism,” whereby if the FDIC does not act within 120 days of receiving a complete application, the application is automatically approved.

This mechanism aims to prevent regulatory delays and provides greater certainty for financial institutions.

Applicants must submit detailed application materials to the FDIC, outlining their planned stablecoin activities, subsidiary ownership and control structures, and including a letter of engagement with a registered accounting firm.

The FDIC will evaluate applications based on statutory factors, focusing on the safety and soundness of the proposed activities.

04 Strict Requirements for Bank Stablecoins

Unlike existing stablecoins in the market, bank-issued stablecoins will face more stringent capital, liquidity, and reserve requirements. According to the FDIC framework, banks issuing stablecoins must hold capital exceeding the minimum standards for traditional deposit-taking activities to address new risks introduced by blockchain payment systems.

Reserve management requires banks to hold USD assets in a 1:1 ratio with circulating tokens, ensuring full collateralization at all times.

Acceptable reserve assets include Federal Reserve bank balances, short-term government bonds, and high-liquidity, low-risk financial instruments approved by regulators. This reserve structure aims to eliminate partial collateralization risks and make bank-issued stablecoins more robust than decentralized models.

Banks will also need to establish sufficient liquidity buffers to meet redemption demands, ensuring continuous and stable operations.

05 Future Regulatory Roadmap

FDIC Acting Chairman Travis Hill revealed that the agency plans to release another proposed rule in the coming months to establish capital, liquidity, and risk management requirements for approved subsidiary stablecoin issuers.

This series of regulatory measures indicates that the U.S. is systematically building a stablecoin regulatory environment that protects consumers while fostering innovation.

The FDIC also stated it will continue exploring regulatory clarity for broader digital asset and tokenized deposit activities. Public comments on the proposed rule will be accepted for 60 days, after which the FDIC will consider all feedback and issue a final rule.

06 Impact on the Existing Stablecoin Market

The FDIC’s new framework could have a profound impact on the current stablecoin market. Major stablecoins like USDC (USD Coin) and DAI have already established significant market positions.

As of December 15, 2025, USDC’s market cap reached approximately $78.4 billion, maintaining a stable price around $1. DAI, the largest decentralized stablecoin on Ethereum, has a market cap of about $4.35 billion, with a price near $0.99908.

The entry of banks into the stablecoin market could alter competitive dynamics. Bank-issued stablecoins will benefit from clear regulation, deposit insurance on reserves, and seamless integration with banking infrastructure, potentially attracting institutions and individual users who are cautious about existing stablecoins.

Additionally, new opportunities may arise for trading platforms like Gate. Stablecoins such as GUSD traded on Gate might need to reassess their positioning and competitive advantages in an increasingly regulated market.

07 Opportunities and Challenges

The path for banks issuing stablecoins presents both opportunities and challenges. For traditional banks, entering the stablecoin space means participating in the rapidly growing digital asset market, developing new revenue streams, and strengthening their position in the payments ecosystem.

For consumers and institutional users, bank-issued stablecoins could offer higher security and regulatory protections, especially regarding reserve transparency and redemption guarantees.

Banks will also need to demonstrate a deep understanding of blockchain infrastructure, reserve management rules, and risk controls beyond traditional banking operations during the application process.

Furthermore, banks must contend with competition from existing stablecoin issuers and adapt to a rapidly evolving technological environment.

Future Outlook

As of December 17, 2025, GUSD trading on Gate is priced at $0.9997, with a 24-hour increase of 0.04%, and a circulating market cap of approximately $19.7 million. Meanwhile, the leading decentralized stablecoin DAI trades at about $0.99908 that day.

The FDIC’s stablecoin framework has been opened for public consultation, marking the official countdown for traditional banks to enter the digital currency space. Regardless of the outcome, this transformation will redefine the nature and future of money.