GENIUS Act Requirements and Standards for FDIC-Supervised Permitted Payment Stablecoin Issuers and Insured Depository Institutions

FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Parts 324, 330, and 350 RIN 3064-AG19 GENIUS Act Requirements and Standards for FDIC-Supervised Permitted Payment Stablecoin Issuers and Insured Depository Institutions AGENCY:

Federal Deposit Insurance Corporation.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Federal Deposit Insurance Corporation (FDIC) is soliciting comment on a proposal that would implement certain requirements pursuant to the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) applicable to FDIC-supervised permitted payment stablecoin issuers and insured depository institutions, clarify deposit insurance coverage for deposits held as reserve assets for payment stablecoins, and clarify the treatment of tokenized deposits.

DATES:

Comments must be received by the FDIC no later than June 9, 2026.

ADDRESSES:

You may submit comments, identified by RIN 3064-AG19, by any of the following methods:

• FDIC Website: https://www.fdic.gov/federal-register-publications. Follow instructions for submitting comments on the agency website.

• Email: Comments@fdic.gov. Include RIN 3064-AG19 in the subject line of the message.

• Mail: Jennifer M. Jones, Deputy Executive Secretary, Attention: Comments—RIN 3064-AG19, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429.

• Hand Delivery to FDIC: Comments may be hand-delivered to the guard station at the rear of the 550 17th Street NW building (located on F Street) on business days between 7 a.m. and 5 p.m.

• Public Inspection: Comments received, including any personal information provided, may be posted without change to https://www.fdic.gov/federal-register-publications. Commenters should submit only information that the commenter wishes to make available publicly. The FDIC may review, redact, or refrain from posting all or any portion of any comment that it may deem to be inappropriate for publication, such as irrelevant or obscene material

uding any personal information provided, may be posted without change to https://www.fdic.gov/federal-register-publications. Commenters should submit only information that the commenter wishes to make available publicly. The FDIC may review, redact, or refrain from posting all or any portion of any comment that it may deem to be inappropriate for publication, such as irrelevant or obscene material. The FDIC may post only a single representative example of identical or substantially identical comments, and in such cases will generally identify the number of identical or substantially identical comments represented by the posted example. All comments that have been redacted, as well as those that have not been posted, that contain comments on the merits of the proposed rule will be retained in the public comment file and will be considered as required under all applicable laws. All comments may be accessible under the Freedom of Information Act.

This proposal, all comments received, and a summary of not more than 100 words of the proposed rule pursuant to the Providing Accountability Through Transparency Act of 2023 are available at https://www.fdic.gov/federal-register-publications.

FOR FURTHER INFORMATION CONTACT:

Alfred L. Seivold, Acting Senior Deputy Director, (415) 808-8248, aseivold@fdic.gov, Charles Kirkner, Senior CFI Specialist, (917) 320-2739, ckirkner@fdic.gov, Division of Complex Institution Supervision and Resolution; Sumaya Muraywid, Chief, Emerging Technology Section, (202) 898-3904, smuraywid@fdic.gov, Mark Mickelson, Senior Examination Specialist, (763) 229-6532, mamickelson@fdic.gov, Division of Risk Management Supervision; David Friedman, Special Advisor to the Director, (703) 508-3934, dfriedman@fdic.gov, Division of Depositor and Consumer Protection; Michael Overmyer, Senior Special Counsel, (917) 320-2795, movermyer@fdic.gov, Chantal Hernandez, Counsel, (202) 898-7388, chhernandez@fdic.gov, Eugene Frenkel, Fin-Tech Counsel, (202) 898-3578, yfrenkel@fdic.gov, James Watts, Counsel, (202)

FDI Act.

A. Subpart A—Requirements and Standards for Permitted Payment Stablecoin Issuers

1. Purpose and Scope (Proposed § 350.0)

Proposed § 350.0 sets forth the purpose and scope of the regulations in subpart A. Paragraph (a) describes the purpose to implement the GENIUS Act, 12 U.S.C. 5901 et seq., with respect to entities for which the FDIC is authorized to issue regulations under the Act. Paragraph (b) provides that proposed part 350 subpart A would apply to all PPSIs for which the FDIC is the primary Federal payment stablecoin regulator.

2. Definitions (Proposed § 350.1)

Proposed § 350.1 contains the definitions of terms used throughout subpart A, which generally follow the definitions provided under the GENIUS Act. For additional clarity, proposed § 350.1(a) would provide that definitions not otherwise defined in subpart A would have the same meaning given to them as in section 2 of the GENIUS Act (12 U.S.C. 5901).

Affiliate. With respect to individuals and entities that may be involved or associated with a PPSI, the FDIC would define “affiliate” to mean a person that controls, is controlled by, or is under common control with another person. This definition would be consistent with the definition used in section 3(w)(6) of the FDI Act (12 U.S.C. 1813(w)(6)), 13 with a modification to replace “company” with “person,” as that term is defined under the GENIUS Act.

13 This provision cites to the definition of “affiliate” under the Bank Holding Company Act, 12 U.S.C. 1841(k).

Bank Secrecy Act. Consistent with the definition provided in section 2(2) of the GENIUS Act (12 U.S.C. 5901(2)), the FDIC would define “Bank Secrecy Act” to mean (i) section 21 of the Federal Deposit Insurance Act (12 U.S.C. 1829b); (ii) Chapter 2 of title I of Public Law 91-508 (12 U.S.C. 1951 et seq. ); and (iii) Subchapter II of chapter 53 of title 31, United States Code and notes thereto (31 U.S.C. 5311 et seq. ). The FDIC proposes to add “and notes thereto” as a clarification.

Customer

at 12 CFR 204.2(b). The term “demand deposit” includes those deposits in tokenized form.

Deposit. The FDIC would define “deposit” to have the meaning as given that term in section 3( l ) of the FDI Act (12 U.S.C. 1813( l )). Consistent with section 4(a)(1)(A)(viii) of the GENIUS Act (12 U.S.C. 5903(a)(1)(A)(viii)), the proposed rule would clarify that the term includes deposits in tokenized form.

Digital asset. The FDIC would define “digital asset” to mirror the definition provided under section 2(6) of the GENIUS Act (12 U.S.C. 5901(6)), and the term would mean any digital representation of value that is recorded

Distributed ledger. The FDIC would define “distributed ledger” to mirror the definition provided under section 2(8) of the GENIUS Act (12 U.S.C. 5901(8)), and the term would mean technology in which data is shared across a network that creates a public digital ledger of verified transactions or information among network participants and cryptography is used to link the data to maintain the integrity of the public ledger and execute other functions.

Distributed ledger protocol. The FDIC would define “distributed ledger protocol” to mirror section 2(9) of the GENIUS Act (12 U.S.C. 5901(9)), and the term would mean publicly available and accessible executable software deployed to a distributed ledger, including smart contracts or networks of smart contracts.

Eligible financial institution. The FDIC would define “eligible financial institution” to mean either: (i) a Federal Reserve Bank; or (ii) a person that is eligible to hold reserve assets in custody under section 10(a) of the GENIUS Act (12 U.S.C

mean publicly available and accessible executable software deployed to a distributed ledger, including smart contracts or networks of smart contracts.

Eligible financial institution. The FDIC would define “eligible financial institution” to mean either: (i) a Federal Reserve Bank; or (ii) a person that is eligible to hold reserve assets in custody under section 10(a) of the GENIUS Act (12 U.S.C. 5909(a)) and that (A) complies with the applicable requirements in section 10(b), (c), and (d) of the GENIUS Act, including with applicable implementing regulations issued by the relevant primary Federal payment stablecoin regulator, primary financial regulatory agency, State bank supervisor, or State credit union supervisor; and (B) if applicable, enters into a custody agreement with a PPSI documenting the person's compliance with applicable requirements in section 10(b), (c), and (d) of the GENIUS Act, and has implemented policies and procedures as to ensure compliance. The proposed term would be used in connection with requirements for maintaining required reserves. A PPSI that engages a financial institution for custody should ensure that the financial institution is contractually obligated to comply with the GENIUS Act section 10 and requirements under proposed part 350 subpart B or applicable implementing regulations by the relevant primary Federal payment stablecoin regulator, primary financial regulatory agency, State bank supervisor, or State credit union supervisor to ensure that reserves are adequately protected. This requirement is expected to encourage PPSIs to engage in appropriate due diligence of any financial institutions that offer to maintain reserve assets for PPSIs.

Fair value. The FDIC would define “fair value” to mean fair value as determined under GAAP.

GAAP. The FDIC would define “GAAP” to mean generally accepted accounting principles as used in the United States.

Insured credit union. The FDIC would define “insured credit union” to mirror section 2(14) of the GENIUS Act (12 U.S.C

nancial institutions that offer to maintain reserve assets for PPSIs.

Fair value. The FDIC would define “fair value” to mean fair value as determined under GAAP.

GAAP. The FDIC would define “GAAP” to mean generally accepted accounting principles as used in the United States.

Insured credit union. The FDIC would define “insured credit union” to mirror section 2(14) of the GENIUS Act (12 U.S.C. 5901(14)), and the term would have the meaning given that term in section 101 of the Federal Credit Union Act. (12 U.S.C. 1752).

Insured depository institution. The FDIC would define “an “insured depository institution” to have the same meaning as that term is given in section 3(c)(2) of the FDI Act (12 U.S.C. 1813(c)(2)). The FDIC believes this divergence from the GENIUS Act, which includes “insured credit union” within the term in section 2 of the GENIUS Act (12 U.S.C. 5901(15)), would be helpful to FDIC-supervised PPSIs and IDIs as it would be consistent with how the term is defined under other provisions within the FDIC's Rules and Regulations.

Monetary value. The FDIC would define “monetary value” to mirror section 2(17) of the GENIUS Act (12 U.S.C. 5901(17)), and the term would mean a national currency or deposit (as defined in section 3( l ) of the FDI Act (12 U.S.C. 1813( l )) denominated in a national currency.

National currency. The FDIC would define “national currency” to mirror section 2(19) of the GENIUS Act (12 U.S.C. 5901(19)), and the term would mean (i) a Federal Reserve note (as the term is used in the first undesignated paragraph of section 16 of the Federal Reserve Act (12 U.S.C. 411)); (ii) money standing to the credit of an account with a Federal Reserve Bank; (iii) money issued by a foreign central bank; or (iv) money issued by an intergovernmental organization pursuant to an agreement by two or more governments.

Outstanding issuance value. The FDIC would define “outstanding issuance value” to mean the total consolidated par value of all of a PPSI's payment stablecoins issued

ii) money standing to the credit of an account with a Federal Reserve Bank; (iii) money issued by a foreign central bank; or (iv) money issued by an intergovernmental organization pursuant to an agreement by two or more governments.

Outstanding issuance value. The FDIC would define “outstanding issuance value” to mean the total consolidated par value of all of a PPSI's payment stablecoins issued. The definition would include the combined total par value of different brands of payment stablecoins issued by the PPSI. This definition would be relevant for requirements related to reserve assets, redemptions, reporting, and audits for larger PPSIs.

Payment stablecoin. The FDIC would define “payment stablecoin” to mirror section 2(22) of the GENIUS Act (12 U.S.C. 5901(22)), and the term would mean a (i) digital asset (A) that is, or is designed to be, used as a means of payment or settlement; and (B) the issuer of which (I) is obligated to convert, redeem, or repurchase for a fixed amount of monetary value, not including a digital asset denominated in a fixed amount of monetary value; and (II) represents that such issuer will maintain, or creates the reasonable expectation that it will maintain, a stable value relative to the value of a fixed amount of monetary value. The proposed definition would also (ii) track the exceptions included in the statutory definition to explicitly exclude from the definition a digital asset that is a (A) national currency; (B) a deposit (as defined in section 3 of the FDI Act (12 U.S.C. 1813), including a tokenized deposit recorded using distributed ledger technology; or (C) a security, as defined in section 2 of the Securities Act of 1933 (15 U.S.C. 77b), section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), or section 2 of the Investment Company Act of 1940 (15 U.S.C. 80a-2). The FDIC would include the addition of “tokenized” to “deposit recorded using distributed ledger technology” to clarify deposits in tokenized form would not be a payment stablecoin

a security, as defined in section 2 of the Securities Act of 1933 (15 U.S.C. 77b), section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), or section 2 of the Investment Company Act of 1940 (15 U.S.C. 80a-2). The FDIC would include the addition of “tokenized” to “deposit recorded using distributed ledger technology” to clarify deposits in tokenized form would not be a payment stablecoin. 15

15 See infra Section III.D.

Permitted payment stablecoin issuer. The FDIC would define “permitted payment stablecoin issuer” to have the meaning given that term in section 2(23) of the GENIUS Act (12 U.S.C. 5901(23)).

Person. The FDIC would define “person” to mirror section 2(24) of the GENIUS Act (12 U.S.C. 5901(24)), and the term would mean an individual, partnership, company, corporation, association, trust, estate, cooperative organization, or other business entity, incorporated or unincorporated.

Primary financial regulatory agency. The FDIC would define “primary financial regulatory agency” to have the meaning given that term in 12 U.S.C. 5301(12)(B) or (C), as applicable. The FDIC believes this term is helpful to define in connection with the eligible financial institution definition.

Private key. The FDIC would define “private key” to mean the unique alphanumeric sequence that allows for a transfer of a particular unit of a digital asset using a distributed ledger. The FDIC believes defining this term is important because cryptographic control of private keys is the cornerstone of digital trust, acting as the ultimate authorization for transfers of digital assets.

Registered public accounting firm. The FDIC would define “registered public accounting firm” to mirror section 2(26) of the GENIUS Act (12 U.S.C. 5901(26)), and the term would have the meaning set forth in section 2 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(12)).

Reserve asset. The FDIC would define “reserve asset” to mean an asset

Significant redemption request

rs of digital assets.

Registered public accounting firm. The FDIC would define “registered public accounting firm” to mirror section 2(26) of the GENIUS Act (12 U.S.C. 5901(26)), and the term would have the meaning set forth in section 2 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(12)).

Reserve asset. The FDIC would define “reserve asset” to mean an asset

Significant redemption request. The FDIC would define “significant redemption request” to mean a circumstance in which aggregate redemption requests exceed 10 percent of a PPSI's outstanding issuance value within a single 24-hour period. As noted below, the FDIC seeks comment on whether 10 percent is the right threshold for redemption requests and whether 24 hours is the right time period.

Subsidiary. The FDIC would define “subsidiary” to have the meaning given that term in section 3(w)(4) of the FDI Act (12 U.S.C. 1813(w)(4)).

United States Coins and Currency. The FDIC would define “United States coins and currency” to mean U.S. coins and currency as described in 31 U.S.C. 5103. This definition is relevant for proposed reserve asset composition, reserve asset value calculation, and operational backstop requirements.

Questions for Definitions Section (Proposed § 350.1)

The FDIC requests comment on the definitions provided under proposed § 350.1, including the following:

Question 1: Are the definitions in the proposed rule sufficiently clear? What additional clarifications, if any, would be helpful? Should the FDIC define any additional terms?

Question 2: Is the distinction, legal or otherwise, between conversion, redemption, or repurchase of payment stablecoins sufficiently clear? Should the FDIC define conversion, redemption, or repurchase? If so, how? Should the FDIC define “redemption” broadly to mean that, for example, the PPSI has initiated payment to the payment stablecoin holder in return for a tendered payment stablecoin? Are there reasons to define “redemption” more narrowly? For example, should the FDIC define redemption to mean

on of “fair value” sufficiently clear? How could the term be further refined or clarified?

Question 8: Is the term “outstanding issuance value” appropriately defined? If not, how could the term be revised, refined, or clarified?

Question 9: Is the term “payment stablecoin” sufficiently clear? Should the FDIC provide additional clarity as to whether a particular type of stablecoin is a “payment stablecoin” under the GENIUS Act?

Question 10: Is the term “private key” appropriate? How could the term be further amended, refined, or clarified?

Question 11: Is the term “reserve asset” sufficiently clear? How could the term be further refined or clarified?

Question 12: Is the term “significant redemption request” sufficiently scoped? If not, how should the FDIC revise the definition? Is 10 percent the appropriate threshold, and is 24 hours the appropriate time period?

Question 13: The GENIUS Act refers to “payment stablecoin holders” across various provisions, particularly with respect to priority of claims, but the Act does not define the term. Should the FDIC define the term? If so, should the term be defined to mean the person that beneficially owns the payment stablecoin? Or should the FDIC instead define the term based on possession via digital wallets or control of private keys? What interactions with other requirements in the proposed rule should the FDIC consider if it chooses to define the term?

3. Severability (Proposed § 350.2)

The FDIC is proposing to include a severability clause in proposed § 350.2, which would provide that the provisions of proposed part 350 are separate and severable from one another. In the event a court stays a particular provision of this rule or determines any provision is invalid, the FDIC intends that the remaining provisions shall continue in effect.

4. Activities (Proposed § 350.3)

Core Activities

Proposed § 350.3 encompasses the range of activities that could be performed by a PPSI, consistent with section 4(a)(7) of the GENIUS Act (12 U.S.C. 5903(a)(7))

another. In the event a court stays a particular provision of this rule or determines any provision is invalid, the FDIC intends that the remaining provisions shall continue in effect.

4. Activities (Proposed § 350.3)

Core Activities

Proposed § 350.3 encompasses the range of activities that could be performed by a PPSI, consistent with section 4(a)(7) of the GENIUS Act (12 U.S.C. 5903(a)(7)).

Section 4(a)(7) of the GENIUS Act lists a narrow set of activities that may be performed by a PPSI. Consistent with the Act, the FDIC is proposing to limit a PPSI's activities as set out in section 4(a)(7) in § 350.3(a) of the proposed rule. First, a PPSI may only (1) issue payment stablecoins; (2) redeem payment stablecoins; (3) manage reserves related to payment stablecoins; and (4) provide custodial or safekeeping services limited to certain assets. 16 The management of payment stablecoin reserves includes purchasing, selling, and holding or holding under custody reserve assets, consistent with Federal and State law. 17 Custody and safekeeping services are limited to only the holding of payment stablecoins, required payment stablecoin reserves, or private keys of payment stablecoins. It does not include custody of non-payment stablecoin digital assets. 18 Proposed § 350.2(a)(1) through (4) of the proposed rule set out the limited range of PPSI activities, which represent the core set of activities of a PPSI.

16 12 U.S.C. 5903(a)(7)(A)(i)-(iv).

17 12 U.S.C. 5903(a)(7)(A)(iii).

18 Digital assets are defined in 12 U.S.C. 5901(6). The term “digital asset” can include payment stablecoins, however the Act specifically allows for a PPSI to custody or keep safe payment stablecoins.

Activities Directly Supporting Core Activities

Additionally, section 4(a)(7)(A)(v) of the GENIUS Act (12 U.S.C

a PPSI.

16 12 U.S.C. 5903(a)(7)(A)(i)-(iv).

17 12 U.S.C. 5903(a)(7)(A)(iii).

18 Digital assets are defined in 12 U.S.C. 5901(6). The term “digital asset” can include payment stablecoins, however the Act specifically allows for a PPSI to custody or keep safe payment stablecoins.

Activities Directly Supporting Core Activities

Additionally, section 4(a)(7)(A)(v) of the GENIUS Act (12 U.S.C. 5903(a)(7)(A)(v)) provides that a PPSI may undertake other activities that “directly support” any of the core activities of issuing and redeeming payment stablecoins, managing payment stablecoin reserves, and providing custody and safekeeping services, as limited by the Act. The allowance of these other supporting activities is reflected in proposed § 350.3(a)(5).

The FDIC would view activities that directly support the core activities enumerated in the Act as only those that would be considered necessary for the PPSI to have the capability to perform the permitted activities or that are fundamental to the operations in performing the core activities. Examples might be hosting digital wallet infrastructure using cloud platforms or on-premises, air-gapped hardware security modules to provide secure safekeeping of payment stablecoin

Activities supporting a PPSI's issuance and redemption of payment stablecoins, management of payment stablecoin reserves, and custody and safekeeping for payment stablecoins are limited to direct support activities, and are irrespective of whether they are performed by a PPSI itself, or through arrangement with an affiliate or a third party.

If a PPSI has questions about whether an activity would be considered by the FDIC to be one directly supporting its core activities of issuing or redeeming payment stablecoins, managing payment stablecoin reserve assets, or providing safekeeping and custody services, the PPSI should contact the FDIC

FDIC seeks comment on how to interpret section 4(a)(7)(B) of the GENIUS Act (12 U.S.C. 5903(a)(7)(B)) and whether it serves as an independent grant of authority or whether it must be consistent with a grant of authority provided from another Federal or State law.

20 See 12 U.S.C. 5903(a)(7)(B).

Related Fee Activity and Customer Buy, Sell Facilitation

Section 16(b) of the GENIUS Act (12 U.S.C. 5915(b)) provides that entities regulated by the FDIC as the primary Federal payment stablecoin regulator, namely PPSIs, are authorized to engage in payment stablecoin activities and investments contemplated by the Act, including acting as principal or agent with respect to any payment stablecoin and the payment of fees to facilitate customer transactions. As a result, beyond the activities outlined in section 4 of the Act (core, direct support, and approvable activities), but consistent with them, proposed § 350.3(a)(9) would provide that a PPSI may undertake any activity contemplated by the GENIUS Act in the capacity of principal or agent with respect to any payment stablecoin, if consistent with the Act. Proposed § 350.3(a)(7) and (8) also list among the permitted activities of a PPSI the assessment of fees associated with purchasing or redeeming payment stablecoins and the payment of fees to facilitate customer transactions, which the FDIC views as incidental to the issuance and redemption of payment stablecoins consistent with law and not affecting the claims of payment stablecoin holders in any insolvency proceedings.

Prohibitions

In addition to setting out what is permitted, the GENIUS Act prescribes several prohibited activities. Consistent with the GENIUS Act, proposed § 350.3(b) would clarify that PPSIs may not engage in certain activities

vernment, or subject to Federal deposit insurance or Federal share insurance. 21 Although disclaimers may be components of complying with these requirements, the FDIC also expects PPSIs to appropriately ensure that representations, marketing materials, and disclosures are clear and consistent with these requirements to avoid direct representations or implications that are likely to cause confusion.

21 In addition, section 18(a)(4) of the FDI Act, 12 U.S.C. 1828(a)(4), and its implementing regulation, 12 CFR part 328, also prohibit any person from misusing the name or logo of the FDIC, engaging in false advertising, or making knowing misrepresentations about deposit insurance.

Interest and Yield Solely in Connection With Holding, Use, or Retention

Proposed § 350.3(b)(4) would prohibit a PPSI from paying the holder of any payment stablecoin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin consistent with section 4(a)(11) of the GENIUS Act (12 U.S.C. 5903(a)(11)). The proposed rule would further provide that the FDIC presumes a PPSI violates the prohibition if: (A) the PPSI has a contract, agreement, or other arrangement with an affiliate of the PPSI or related third party to pay interest or yield to the affiliate or related third party; (B) the affiliate, related third party, or an affiliate of a related third party has a contract, agreement, or other arrangement to pay interest or yield (whether in cash, tokens, or other consideration) to a holder of any payment stablecoin issued by the PPSI solely in connection with the holding,

With respect to this presumption, the proposed rule would define a related third party to mean (A) a person offering to pay interest or yield to payment stablecoin holders as a service; and (B) any person that the PPSI issues payment stablecoins on the person's behalf or under the person's branding

n) to a holder of any payment stablecoin issued by the PPSI solely in connection with the holding,

With respect to this presumption, the proposed rule would define a related third party to mean (A) a person offering to pay interest or yield to payment stablecoin holders as a service; and (B) any person that the PPSI issues payment stablecoins on the person's behalf or under the person's branding. A PPSI may rebut the presumption by submitting written materials that, in the FDIC's judgment, demonstrate that the contract, agreement, or other arrangement is not prohibited under proposed § 350.3(b)(4) and not an attempt to evade the prohibition.

The FDIC seeks comment on this specific part of the proposal, and whether this is an appropriate interpretation and implementation of the prohibition in section 4(a)(11) of the GENIUS Act (12 U.S.C. 5903(a)(11)).

Pledging, Rehypothecating, and Reusing Reserve Assets

Proposed § 350.3(b)(5) would prohibit a PPSI from pledging, rehypothecating, or reusing any reserve assets required under § 350.4(a) and (e) of the proposed rule either directly or indirectly, including through a third party custodian of the reserve assets, except for the exceptions described in proposed § 350.3(b)(5)(i) through (iii), consistent with section 4(a)(2) of the GENIUS Act. A PPSI may only pledge, rehypothecate or re-use any reserve assets for the purpose of: (i) satisfying margin obligations in connection with investments in required reserves under proposed § 350.4(e)(5) or (6); (ii) satisfying obligations associated with the use, receipt, or provision of standard custodial services; or (iii) creating liquidity to meet reasonable expectations of requests to redeem payment stablecoins, such that reserves in the form of Treasury bills with a maturity of 93 days or less may be sold as purchased securities in repurchase agreements, provided that either: (A) the repurchase agreements are cleared by a clearing agency registered with the Securities and Exchange Commission; or (B) the PPSI receives pr

6) would prohibit a PPSI from engaging in any activity that the FDIC determines is done in evasion of the requirements, standards, or prohibitions found in section 4 of the GENIUS Act or proposed part 350. This paragraph is consistent with section 4(h)(1) of the GENIUS Act (12 U.S.C. 5903(h)) which gives the FDIC the authority to issue regulations to prevent evasions of section 4 of the GENIUS Act.

Unlawful Marketing

Proposed § 350.3(b)(7) would prohibit a PPSI from marketing a product in the United States as a payment stablecoin, or from issuing a payment stablecoin, unless the product or payment stablecoin is issued in compliance with the GENIUS Act and part 350. This paragraph is consistent with section 4(e)(3)(A) of the GENIUS Act (12 U.S.C. 5903(e)(3)(A)) which makes it unlawful to market a product in the United States as a payment stablecoin unless it is issued pursuant to the GENIUS Act. The FDIC will monitor FDIC-supervised PPSI's marketing, as appropriate, to ensure that they do not violate the GENIUS Act or part 350 of the proposed rule, and for referral to the Department of Treasury for possible violation of section 4(e)(3)(A) of the GENIUS Act.

Providing Credit

The FDIC is also proposing to prohibit a PPSI from providing credit to its customers to purchase payment stablecoins in § 350.3(b)(8) of the proposed rule. The FDIC interprets the GENIUS Act's requirements that a PPSI maintain reserve assets comprised of a narrow set of highly liquid assets and that a PPSI engage in a narrow set of activities to be the key guardrails to ensure a PPSI is able to satisfy redemption requests. If a PPSI lends funds to customers to enable customers to purchase payment stablecoins, or were to otherwise issue payment stablecoins to customers on credit extended by the PPSI, the PPSI would then, in effect, need to access separate funding to acquire and maintain identifiable reserve assets to back the payment stablecoins issued on credit

o ensure a PPSI is able to satisfy redemption requests. If a PPSI lends funds to customers to enable customers to purchase payment stablecoins, or were to otherwise issue payment stablecoins to customers on credit extended by the PPSI, the PPSI would then, in effect, need to access separate funding to acquire and maintain identifiable reserve assets to back the payment stablecoins issued on credit. This could result in a highly leveraged balance sheet in which the reserve assets do not provide the intended resiliency. The FDIC seeks comment on whether this is an appropriate prohibition, and whether other alternatives would better achieve the Act's objectives.

Questions for Activities Section (Proposed § 350.3)

The FDIC requests comment on the activities described in proposed § 350.3, including the following:

Question 14: Are there any other activities that the FDIC did not include in proposed § 350.3 that PPSIs would need to, or should be able to, engage in under the GENIUS Act? If so, please describe the kinds of activities and any appropriate limits for such activities.

Question 15: Are there other limits or conditions the FDIC should consider with respect to PPSIs acting as principal or agent with respect to payment stablecoins? Should the FDIC specify the activities contemplated under the GENIUS Act for which a PPSI may act as principal or agent for payment stablecoins under section 16(b) of the Act (12 U.S.C

ons? What factors should the FDIC consider prior to granting approval of the sale of reserves as purchased securities in repurchase agreements under proposed § 350.3(b)(5)(iii)(B)?

Question 28: Is the proposed prohibition on providing credit to customers to purchase payment stablecoins appropriate? If so, should the prohibition be modified in any way? Should it be narrower or broader? If not, are there alternatives to achieve the intended objective or ensuring reserve assets achieve the intended resiliency? Are there any other activities that the FDIC should expressly prohibit as not being permissible and not in direct support of the core activities of issuance, redemption, managing reserves, and providing certain safekeeping and custody services?

5. Reserve Assets (Proposed § 350.4)

Reserve Requirement

Proposed § 350.4 contains requirements applicable to reserve assets as required by section 4(a) of the GENIUS Act (12 U.S.C. 5903(a)), which provides that a PPSI must maintain identifiable reserves backing the outstanding payment stablecoins of the PPSI on an at least one-to-one basis and specifies the required reserve asset types.

Proposed § 350.4(a)(1) would require the PPSI to maintain identifiable reserves fully backing the outstanding payment stablecoins of the PPSI, the reserve asset value of which must at all times meet or exceed the total outstanding issuance value of payment stablecoins issued by the PPSI. To maintain “identifiable reserves,” the PPSI shall maintain appropriate records to identify required reserve assets underlying a particular payment stablecoin. The FDIC generally anticipates that reserve assets will be recorded on the PPSI's balance sheet under GAAP and be included in the quarterly reports required under proposed § 350.7 and on Consolidated Reports of Condition and Income (Call Reports) for the parent IDI. Proposed § 350.4(a)(2) would require the PPSI to monitor the issuance and redemption of payment stablecoins to ensure compliance

form, backing payment stablecoins, which the FDIC believes is not consistent with Congressional intent.

Identifiable Reserves

Proposed § 350.4(c) would require that reserves maintained by a PPSI are readily identified as backing outstanding payment stablecoins issued and differentiated from assets not backing payment stablecoins, particularly when the PPSI issues more 22 of payment stablecoin. A PPSI may issue multiple brands of distinct payment stablecoin but, under the proposal, would be required to maintain required reserves with assets that can be separately identified as backing a particular brand of distinct payment stablecoin and each brand of payment stablecoin would independently comply with proposed § 350.4(a). Thus, if a PPSI issues more than one brand of distinct payment stablecoin, each payment stablecoin must have a segregated pool of reserves, kept, maintained, and recorded separately, unless the FDIC approves in writing that the PPSI may comingle reserves.

22 For purposes of this proposal, the FDIC is using the term “brand” to describe each legally distinguishable payment stablecoin issued by the same PPSI.

If one of the PPSI's payment stablecoins fails to maintain reserves on a one-to-one basis to its outstanding issuance value, in some cases, that may erode market confidence in the PPSI's other brands of payment stablecoins, even as the PPSI maintains separate required reserves identifiable for each brand of payment stablecoin. Under the proposal, the FDIC would expect, at a minimum, that a PPSI with multiple brands of payment stablecoins maintain separate and segregated pools of reserves for each payment stablecoin to protect against the contagion risk from one payment stablecoin failing. The PPSI would also be expected to regularly monitor the value of reserves for each brand of payment stablecoin, with the ability to immediately identify if any one brand of payment stablecoin falls below the required threshold in proposed § 350.4(a) of the proposed rule

days or less, or issued with a maturity of 93 days or less; (5) money received under repurchase agreements with the PPSI acting as a seller of securities and with an overnight maturity backed by Treasury bills with a maturity of 93 days or less provided the money is received consistent with one or more of the

Asset Diversification and Concentration

Section 4(a)(4)(A)(iii) of the Act (12 U.S.C. 5903(a)(4)(A)(iii)) requires the FDIC to issue regulations implementing reserve asset diversification, including deposit concentration at banking institutions and interest rate risk management standards that are tailored to the business model and risk profile of the PPSI and that do not exceed standards that are sufficient to ensure the ongoing operations of the PPSI. Proposed § 350.4(f) would implement tailored reserve asset diversification requirements.

Given the narrow scope of eligible reserve assets, the FDIC does not believe extensive asset diversification requirements are necessary. However, the FDIC is seeking comment on whether limitations on any specific reserve asset category or other restrictions on reserve asset concentration would be appropriate. For example, given that uninsured deposits present credit risk, the FDIC seeks comment on whether there should be limits on the extent to which reserve assets may be held in deposits not insured by the FDIC.

Proposed § 350.4(f) would require that a PPSI limit its total counterparty exposure to any one eligible financial institution, regardless of type of reserve asset, to no more than 40 percent of its reserve assets, across all brands of payment stablecoins issued by the PPSI. This requirement would limit a PPSI from being overly exposed to or concentrated in a single eligible financial institution

Proposed § 350.4(f) would require that a PPSI limit its total counterparty exposure to any one eligible financial institution, regardless of type of reserve asset, to no more than 40 percent of its reserve assets, across all brands of payment stablecoins issued by the PPSI. This requirement would limit a PPSI from being overly exposed to or concentrated in a single eligible financial institution. The PPSI should take into account exposure across all of an eligible financial institution's parents, subsidiaries, or affiliates, in terms of its risk management required under proposed § 350.4(f) of the proposed rule, so the PPSI minimizes its risk of being subject to the health of a single eligible financial institution. This requirement would ensure that a PPSI has multiple arrangements for meeting redemption requests if reserve assets held by any one eligible financial institution are at risk. The FDIC selected 40 percent so no single eligible financial institution custodies a majority of the PPSI's reserve assets.

Monthly Report on Reserve Composition

Proposed § 350.4(g) would require PPSIs to publish, for each brand of payment stablecoin issued by the PPSI, by close of business on the last day of each month, the composition of the PPSI's reserves held pursuant to proposed § 350.4(e) as of close of business of the last day of the prior month, using a format substantially similar to the template provided in table 1 to proposed § 350.4(g). The report should contain the total number of outstanding payment stablecoins issued by the PPSI, including the average tenor and geographic location of custody of each category of reserve asset. The report should contain information as of the previous month. These public disclosures are not required to include specific information on the institutions, branches, or counterparties involved in the holding of reserve assets

4(a)(1)(A)(vii) of the GENIUS Act (12 U.S.C. 5903(a)(1)(A)(vii)) provides that reserve assets may include “any other similarly liquid Federal Government-issued asset approved by the Federal payment stablecoin regulator, in consultation with the State payment stablecoin regulator, if applicable.” In the proposed rule, the FDIC has not included any such assets in the list of eligible reserve assets. Should the FDIC include a list of approved reserve assets in proposed § 350.4(e) for “similarly liquid Federal government-issued assets?” If so, what asset(s) should be included? Alternatively, should the FDIC implement a procedure for approvals in the future of “similarly liquid federal government-issued assets?” If so, how should this process work? Should there be an interagency process with the other primary Federal payment stablecoin regulators?

Question 35: Should the provisions relating to repurchase agreements and reverse repurchase agreements be clarified? Should the FDIC provide that deposits can serve as collateral for repurchase agreements? If so, what limitations, if any, should the FDIC include with respect to the use of deposits as collateral?

Question 36: Should the FDIC include in its list of approved reserve assets at proposed § 350.4(e) an acknowledgment that tokenized assets that comply with all applicable laws and regulations will be permitted? If so, why? Should the FDIC include factors to consider in approving a reserve asset in a tokenized form?

Question 37: Should the FDIC include by rule at proposed § 350.4(e) a process for the FDIC to approve additional reserve asset types in the future? If so, how should that process work? How should the FDIC coordinate such a process with other payment stablecoin regulators?

Question 38: Does proposed § 350.4 provide for sufficient information and disclosures to enable payment stablecoin holders to understand reserve composition and sufficiently consider potential risks related to inadequate reserves and insolvency?

Question 39: Should the FDIC req

how should that process work? How should the FDIC coordinate such a process with other payment stablecoin regulators?

Question 38: Does proposed § 350.4 provide for sufficient information and disclosures to enable payment stablecoin holders to understand reserve composition and sufficiently consider potential risks related to inadequate reserves and insolvency?

Question 39: Should the FDIC require PPSIs to maintain a minimum amount of reserve assets in the form of deposits? If yes, how would the FDIC calibrate the deposit requirement for PPSIs? Should there be a cutoff for PPSIs above or below a certain size threshold that should be required to place deposits? If so, why? What would be the implications of such a cutoff?

Question 40: Given that uninsured deposits present credit risk, should there be a limit on the amount of reserve assets that can be held in deposits that are not FDIC-insured or shares that are not NCUA-insured?

Question 41: Consistent with the GENIUS Act, the proposed rule would allow United States coins and currency to serve as reserve assets. However, physical currency has limitations, especially if needing to deploy physical currency as it requires transportation, to meet redemption demands. Should the FDIC impose limits on physical currency as a reserve asset in the proposed rule? For example, the FDIC could require that United States coins and currency be limited to no more than 5 percent or 10 percent of a PPSI's reserve assets

ts. However, physical currency has limitations, especially if needing to deploy physical currency as it requires transportation, to meet redemption demands. Should the FDIC impose limits on physical currency as a reserve asset in the proposed rule? For example, the FDIC could require that United States coins and currency be limited to no more than 5 percent or 10 percent of a PPSI's reserve assets. Should the FDIC impose any additional requirements with respect to physical currency to make sure that physical currency is safeguarded? Should there be periodic verification or inspection requirements for United States currency used as reserve assets?

Question 42: Should the proposed rule include special limits on Treasury notes, bills and bonds and notes that may be more thinly traded and therefore more likely to sell at a discount? The GENIUS Act would allow PPSIs to hold as reserve assets Treasury notes and bonds so long as they have a remaining maturity of 93 days or less. Older and off-the-run Treasury securities may be more difficult to sell and may only be marketable at a discount.

Question 43: Should the FDIC expressly require that a certain percentage of reserve assets be held in custody at a third-party custodian? What are the potential costs and benefits of this approach, including with respect to operational risk?

Question 44: In the provision in proposed § 350.4(e)(6) regarding reverse repurchase agreements, is the proposed rule sufficiently clear in its reference to “overcollateralization in line with standard market terms?” What other clarifications should the FDIC provide?

Question 45: Should the proposed rule include special measures to ensure that reverse repurchase agreements are appropriately overcollateralized? Proposed § 350.4(e)(6) would permit the inclusion reverse repurchase agreements “subject to overcollateralization in line with standard market terms” as reserve assets

or all of the requirements in proposed § 350.4(f) for a subsidiary of an FDIC-supervised IDI approved to be a PPSI if the IDI has less than a certain amount of total assets ( e.g., $10 billion, $30 billion, $50 billion)? Should a PPSI that is a subsidiary of an FDIC-supervised IDI with less than a certain amount of total assets be permitted to hold a larger percentage, or all, of its reserve assets as deposits at the FDIC-supervised IDI? Should any such exception be subject to any conditions? Should it only be available if the FDIC-supervised IDI is well-capitalized?

Question 52: Should the FDIC require PPSIs to maintain a minimum amount of their reserve assets in cash or cash equivalents or assets that may more easily be used for short-term liquidity needs to diversify the maturity profile of reserve assets, such as within a daily or weekly timeframe, akin to the requirements for money market funds in SEC Rule 2a-7 or short-term investment funds in 12 CFR 9.18(b)(4)(iii)? Should the FDIC require PPSIs to maintain a minimum percentage of reserve assets ( e.g., 10 percent) as “immediately available liquidity” ( i.e., deposits or insured shares payable upon demand or money standing to the credit of an account with a Federal Reserve Bank)? If so, should the FDIC impose a cap ( e.g., 50 percent) on how much required “immediately available liquidity” a PPSI can maintain at any one eligible financial institution? Should the FDIC require PPSIs to maintain a minimum percentage of reserve assets ( e.g., 30 percent) as “liquidity available within one business week” ( i.e., deposits or insured shares payable upon demand, money standing to the credit of an account with a Federal Reserve Bank, or amounts receivable and due unconditionally within five business days on pending sales of reserve assets, maturing reserve assets, or other maturing transactions)? Should the FDIC impose requirements relating to the weighted average maturity of the PPSI's stock of reserve assets, such as requiring the weighted average maturity of t

tanding to the credit of an account with a Federal Reserve Bank, or amounts receivable and due unconditionally within five business days on pending sales of reserve assets, maturing reserve assets, or other maturing transactions)? Should the FDIC impose requirements relating to the weighted average maturity of the PPSI's stock of reserve assets, such as requiring the weighted average maturity of the reserve assets to be no more than 20 days? If the FDIC includes quantitative diversification and concentration requirements like those mentioned above, should they be structured as mandatory requirements or as a safe harbor?

Question 53: Should the FDIC impose restrictions on when a PPSI can withdraw surplus reserve assets? Should the FDIC require that a PPSI only withdraw any surplus reserve assets in excess of outstanding issuance value once per month, upon the publication and certification of the composition report?

Question 54: Is the FDIC's proposed approach to consequences when a PPSI fails to meet minimum capital or operational backstop requirements appropriate? Alternatively, should the proposed rule require a PPSI to begin liquidating reserve assets at the end of two consecutive quarters of failing to meet these requirements?

Question 55: The FDIC invites comment on the extent to which additional diversification requirements are necessary. Should the FDIC require that PPSIs maintain more than one type of reserve asset?

Question 56: Is the FDIC's proposed approach to consequences when a PPSI's amount of reserves falls below the required minimum appropriate? Alternatively, should the proposed rule require a PPSI to begin liquidating reserve assets to meet redemption demands if the PPSI fails to meet its minimum reserve asset requirement in proposed § 350.4(a)?

Question 57: Section (4)(a)(1)(A)(ii) of the GENIUS Act (12 U.S.C

reserve assets do PPSIs plan to rehypothecate, if at all? Which scenarios or risks could cause these rehypothecated assets to lose value or not be returned at original value and what controls can mitigate these risks?

Question 59: Should other liquidity rules be amended to accommodate the changes made by the proposed rule and the GENIUS Act? Should the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) rules be amended so that depository institutions are unable to include high quality liquid assets (HQLA) held by PPSI subsidiaries as eligible HQLA in their own LCR and NSFR calculations? Similarly, should any outflows associated with a PPSI subsidiary be excluded from a parent entity's LCR calculations? Should the payment stablecoin activities of permitted payment stablecoin subsidiaries be fully excluded from the LCR calculations of parent entities? Or should there be a limited outflow commensurate with the possibility that a parent entity may provide support to a PPSI subsidiary (for example, 1 percent, 5 percent, or 10 percent or outstanding issuance value)? Should the LCR rule be amended in light of any other implications of the GENIUS Act, such as how it may apply to custodians under section 10 of the GENIUS Act?

Question 60: For purposes of incorporating “average tenor and geographic location of custody of each category of reserve assets” in the composition report required under proposed § 350.4(g), what, if any,

Question 61: Are there any additional steps that the FDIC should take to encourage transparency while minimizing burden with respect to the reserve asset composition report?

Question 62: With respect to a PPSI that issues multiple brands of payment stablecoins, such as in white label arrangements, what modifications to the reporting requirements, including the reserve asset composition report, would be appropriate? Are there any additional disclosures that the PPSI should provide so the report is not misleading?

Question 63: Should the composition report be required to list

62: With respect to a PPSI that issues multiple brands of payment stablecoins, such as in white label arrangements, what modifications to the reporting requirements, including the reserve asset composition report, would be appropriate? Are there any additional disclosures that the PPSI should provide so the report is not misleading?

Question 63: Should the composition report be required to list and name any IDIs holding reserve assets? Should the report be required to list and name other eligible financial institutions holding reserve assets?

Question 64: Should the values and information in the monthly report be required to be as of a particular date or time? Should the monthly report be required to include both month end figures (for the previous month) and some information that can be presented in real-time (for example, the value of reserves or outstanding issuance value)? Are there potential challenges in providing assurance over real-time information presented in a monthly report?

Question 65: Is the requirement in proposed § 350.4(h) to have information disclosed in the previous month-end report examined by a registered public accounting firm sufficiently clear? If not, what additional clarity should the FDIC provide with respect to the examination by a registered public accounting firm? Should the examination be performed at the “reasonable assurance” level or at some other standard? What additional standards, if any, should the FDIC apply to ensure that the examination by the registered public accounting firm is accurate and appropriate? Should the engagement letter between the PPSI and the registered public accounting firm require the registered public accounting firm to attest to whether the PPSI is in compliance with the reserve asset requirements in proposed § 350.4, based on the information available to the registered public accounting firm? What criteria should be used for the examination by the registered public accounting firm? Would assertions from the management of the PPSI regarding the

lic accounting firm require the registered public accounting firm to attest to whether the PPSI is in compliance with the reserve asset requirements in proposed § 350.4, based on the information available to the registered public accounting firm? What criteria should be used for the examination by the registered public accounting firm? Would assertions from the management of the PPSI regarding the information in the issuer's weekly or monthly report be sufficient? If not, what other criteria should be included?

Question 66: Should the FDIC add or remove specific data points from Table 1 to proposed § 350.4(g)—Monthly Composition Template? Is the template appropriately configured to capture the data needed for the required month-end reports? Should the FDIC provide instructions for using the template or is the format of the template sufficiently clear to complete without instructions? Is there a different format or template that is better suited for this purpose than the proposed Table 1?

Question 67: Should the FDIC require PPSIs to monitor the financial condition of eligible financial institutions, including IDIs, holding reserve assets?

Question 68: Is the FDIC's approach to PPSIs that fail to meet minimum reserve requirements in proposed § 350.4(i) appropriate? If the PPSI is unable to meet the requirements what other actions should the FDIC consider directing the PPSI to perform? What measures would be appropriate for a PPSI to take to meet their requirements in proposed § 350.4(a)?

Question 69: The FDIC proposes that all PPSIs maintain a written contingency plan in proposed § 350.4(j). Should the FDIC specify what measures PPSIs should include in their contingency plans? If yes, what measures would be appropriate to include?

Question 70: Should the FDIC require that PPSIs maintain processes for the orderly redemptions of outstanding payment stablecoins in exigent circumstances in proposed § 350.4(k)? If so, what, if anything, should be required?

6

ase and Redemptions

Proposed § 350.5(d)(1) would provide that a PPSI must also publicly, clearly, and conspicuously disclose in plain language and in a format that is readily noticeable, readily understandable, and segregated from other information: (i) the name of the PPSI that issues the brand of payment stablecoin; (ii) that the PPSI is the entity that is obligated to convert, redeem, or repurchase the payment stablecoin for a fixed amount of monetary value; (iii) the link to the monthly composition report of the relevant PPSI's reserves as required under proposed § 350.4(g); and (iv) all fees associated with purchasing or redeeming payment stablecoins. The PPSI should make such disclosures clear for each brand of payment stablecoin.

Proposed § 350.5(d)(2) provides that a PPSI shall update the disclosures in proposed § 350.5(d)(1)(iv) if there are any increases in the fees associated with purchasing or redeeming payment stablecoins and provide at least seven calendar days' prior notice of the change, including by securely delivering the notice to current customers for whom the PPSI has contact information. Such disclosures and any updates to its disclosures shall be published on the PPSI's website, as described in proposed § 350.5(d)(3).

Proposed § 350.5(d)(4) provides that a PPSI shall include the disclosures in proposed § 350.5(d)(1) and any updates made with respect to proposed § 350.5(d)(2) in any customer agreements that it provides

n request in the event of fraud? Should a PPSI be able to pause or refuse redemption in any other scenarios like a cyber-attack or idiosyncratic market events? If the FDIC permits exceptions or refusals to timely redemption for cases of fraud, cyber-attack or market events, how should the FDIC design or limit the exception so that the purpose of the timely redemption provision is not thwarted?

7. Risk Management (Proposed § 350.6)

Section 4(a)(4)(A)(iv) of the GENIUS Act (12 U.S.C. 5903(a)(4)(A)(iv)) provides that the FDIC must issue regulations implementing appropriate operational, compliance, and information technology risk management principles-based requirements and standards, including Bank Secrecy Act and sanctions compliance standards, that are tailored to the business model and risk profile of PPSIs and consistent with applicable law. Accordingly, proposed § 350.6 would implement this provision and address: (i) general operational and managerial standards; (ii) information technology and security; and (iii) the anti-money laundering and economic sanctions compliance programs certification requirement.

Internal Controls and Information Systems

The FDIC is proposing risk management requirements and standards in proposed § 350.6(a) that largely provide for the PPSI to design commensurate with the nature, complexity, and risk of a PPSI's activities. Many of the standards in proposed § 350.6(a) are adapted from relevant provisions of 12 CFR part 364, Appendix A, which in turn implement 12 U.S.C. 1831p-1. The FDIC identified standards from Appendix A of Part 364 that fit the requirements of section 4(a)(4)(A)(iii) or 4(a)(4)(A)(iv) of the GENIUS Act (12 U.S.C. 5903(a)(4)(A)(iii), (iv)) and then adapted and tailored those standards to the business models of PPSIs, as appropriate. The FDIC is also seeking comment on whether to adopt more general risk management standards, with less specificity than provided in the proposal, as described below

A of Part 364 that fit the requirements of section 4(a)(4)(A)(iii) or 4(a)(4)(A)(iv) of the GENIUS Act (12 U.S.C. 5903(a)(4)(A)(iii), (iv)) and then adapted and tailored those standards to the business models of PPSIs, as appropriate. The FDIC is also seeking comment on whether to adopt more general risk management standards, with less specificity than provided in the proposal, as described below.

Proposed § 350.6(a)(1) would require that a PPSI have internal controls and

Internal Audit System

Proposed § 350.6(a)(2) requires PPSIs to have an internal audit system that is appropriate to the size and complexity of the PPSI and the nature, scope, and risk of its activities and that provides for: (i) adequate monitoring of the system of internal controls through an internal audit function, or for a PPSI whose size, complexity or scope of operations does not warrant a full scale internal audit function, a system of independent reviews of key internal controls; (ii) independence and objectivity; (iii) qualified persons; (iv) adequate independent testing and review of internal controls and information systems; (v) adequate documentation of tests and findings and any corrective actions; and (vi) verification and review of management actions to address deficiencies. Internal audit programs are expected to include independent tests and reviews, as appropriate, with scopes and activities that are informed by an assessment of the risk and control environment. While the proposed § 350.6(a)(2) requires that internal audit functions be structured with independence and objectivity to promote impartiality and avoid potential conflicts of interest, the proposed rule would not mandate a specific organizational structure or a standardized risk management approach. PPSIs will be able to tailor the size and organizational structure of the internal audit function, and any outsourcing arrangements, commensurate with the size, complexity, and risk profile of its activities

jectivity to promote impartiality and avoid potential conflicts of interest, the proposed rule would not mandate a specific organizational structure or a standardized risk management approach. PPSIs will be able to tailor the size and organizational structure of the internal audit function, and any outsourcing arrangements, commensurate with the size, complexity, and risk profile of its activities.

Interest Rate Exposure

Proposed § 350.6(a)(3) addresses interest rate risk pursuant to section 4(a)(4)(A)(iii) of the GENIUS Act (12 U.S.C. 5903(a)(4)(A)(iii)) which requires the FDIC to establish interest rate risk management standards among other things. The proposal would require a PPSI to manage interest rate risk in a manner that is appropriate to the size and complexity of the PPSI and the complexity of its assets and liabilities. Although the reserve composition requirements proposed under proposed § 350.4(e) limit reserve assets to those that generally have limited duration or no duration ( e.g., funds held as demand deposits), PPSIs should understand the impact that changes in interest rates, particularly increases in interest rates over short-time periods, may have on the fair value and monetization of interest-sensitive reserve assets. Interest rate risk management practices may also need to consider the impact that the interest rate environment may have on the demand for payment stablecoins and anticipated redemptions, given the prohibition of paying interest to payment stablecoin holders solely in connection with the holding, use, or retention of payment stablecoins under proposed § 350.3(b)(4).

Asset Growth

Proposed § 350.6(a)(4) requires a PPSI's asset growth to be commensurate with risk management and operational capabilities. The proposal does not establish limits on asset growth rates or the overall size of a PPSI but is intended to ensure the growth of assets is managed prudently and that management maintains risk management and operational capabilities

r proposed § 350.3(b)(4).

Asset Growth

Proposed § 350.6(a)(4) requires a PPSI's asset growth to be commensurate with risk management and operational capabilities. The proposal does not establish limits on asset growth rates or the overall size of a PPSI but is intended to ensure the growth of assets is managed prudently and that management maintains risk management and operational capabilities.

Insider and Affiliate Transactions

Proposed § 350.6(a)(5) addresses insider and affiliate transactions and is intended to add to the protection of the assets and resources of a PPSI from misuse for the benefit of insiders, affiliates, or related entities. Under proposed § 350.6(a)(5)(i), a PPSI would be required to ensure that transactions between or among the PPSI and insiders or affiliates (other than the parent IDI of which it is a subsidiary): (A) do not pose significant risks of material financial loss to the PPSI and (B) are conducted on terms that are the same or at least as favorable to the PPSI as those prevailing at the time for comparable transactions with or involving non-insiders or non-affiliates (or in the absence of comparable transactions, are offered on terms and under circumstances that, in good faith would be offered to, or would apply to non-affiliates or non-insiders).

Oversee Service Provider Arrangements

Proposed § 350.6(a)(6) would provide requirements for overseeing third-party service provider arrangements. Specifically, a PPSI must: (i) exercise appropriate due diligence in selecting its service providers; (ii) require its service providers by contract to implement appropriate measures designed to meet the requirements of proposed part 350; and (iii) as appropriate, monitor its service providers to confirm they have satisfied their obligations under proposed part 350

integrity, and availability of information technology; (iv) controls for the development, maintenance, and changes to information technology, including controls for testing, storage, and deployment of the code base, including the smart contract code; (v) evaluation, validation, and reporting processes to ensure that information technology systems and controls, including smart contracts, are operating as intended; (vi) periodic independent testing of controls; and (vii) a comprehensive and effective program for the identification, assessment, and response to operational and security incidents. A comprehensive incident response program is essential for a PPSI to respond in an effective and timely manner to an incident and mitigate its impact.

Safe Handling of Digital Assets

Proposed § 350.6(b)(3) provides that a PPSI shall develop, implement, and maintain appropriate measures to ensure secure handling of digital assets, including private key management, backup, and recovery incorporating: (i) relevant technical, operational, strategic, market, legal, and compliance considerations relating to each digital asset and its underlying distributed ledger(s); and (ii) material developments specifically related to supported digital assets and their underlying distributed ledger(s). 23 Maintaining appropriate measures for private key management, backup, and recovery incorporating both technical and operational factors and material on-chain developments is essential to manage risk associated lost or stolen private keys and the resulting loss or theft of assets

ii) material developments specifically related to supported digital assets and their underlying distributed ledger(s). 23 Maintaining appropriate measures for private key management, backup, and recovery incorporating both technical and operational factors and material on-chain developments is essential to manage risk associated lost or stolen private keys and the resulting loss or theft of assets. For example, depending on the assessed risk, appropriate layered security could include controls such as: (1) private key security via multi-party computation or multi-signature technology to prevent single points of failure, alongside, cold/offline storage for assets; (2) geographically dispersed, encrypted, and regularly tested recovery keys; and (3) monitoring for technical, legal, and material on-chain updates, such as blockchain forks or smart contract vulnerabilities.

23 If a PPSI holds digital assets on a customer's behalf, the PPSI's risk management practices must reflect this activity. Consistent with the July 14, 2025 Joint Statement on Risk Management Considerations for Crypto-Asset Safekeeping, a PPSI holding digital assets on a customer's behalf would be required to maintain risk management practices, and information security practices in particular, that reflect the PPSI's capacity to understand a complex and evolving asset class, ability to ensure a strong control environment, and appropriate contingency plans to address unanticipated challenges in effectively providing services to customers.

Adjust the Program

Proposed § 350.6(b)(4) would require that a PPSI monitor, evaluate, and adjust, as appropriate, the information technology and security program in light of any relevant changes in technology, the sensitivity of its customer information, internal or external threats, and the PPSI's own changing business arrangements, such as mergers and acquisitions, alliances and joint ventures, third-party arrangements, and changes to applicable information systems

tor, evaluate, and adjust, as appropriate, the information technology and security program in light of any relevant changes in technology, the sensitivity of its customer information, internal or external threats, and the PPSI's own changing business arrangements, such as mergers and acquisitions, alliances and joint ventures, third-party arrangements, and changes to applicable information systems. Monitoring, evaluating, and adjusting the information technology and security program facilitates a risk-based approach, ensuring that information technology defenses keep pace with rapidly evolving cyber threats, blockchain technology advancements, and business changes like mergers and acquisitions.

Notification of Unauthorized Access

Proposed § 350.6(b)(5) would provide that a PPSI shall maintain an appropriate program to notify its customers if the PPSI becomes aware of an incident of unauthorized access to sensitive customer information. The standards in proposed § 350.6(b)(5) are in addition to, and do not supersede, other notification standards including the Interagency Guidelines Establishing Information Security Standards (Appendix B to Part 364). A PPSI could, if it so chose, satisfy the notification obligation under this section and other notification requirements through a single, comprehensive notification that met all relevant timing and content requirements. The program shall require the delay of customer notice if an appropriate law enforcement agency determines that notification will interfere with a criminal investigation and provides the permitted payment stablecoin issuer with a written request for the delay.

Information Technology Resilience

Proposed § 350.6(b)(6) would provide that a PPSI's information technology and security program shall include measures to reasonably address continuity of operations and recovery of critical functions in the face of disruptions, including by business impact analyses, testing of vulnerability, and testing with critical service providers

ering and economic sanctions compliance programs that are reasonably designed to prevent the PPSI from facilitating money laundering, in particular, facilitating money laundering for cartels and organizations designated as foreign terrorist organizations under section 219 of the Immigration and Nationality Act (8 U.S.C. 1189) and the financing of terrorist activities, as required by the GENIUS Act. The PPSI would be required to file the initial certification within 180 days of being approved under the application process and by April 1 of each year thereafter. Given that the certification requirement would be ongoing and related to a PPSI's compliance programs, the FDIC is proposing to include the certification requirement within the risk management provisions in subpart A of 12 CFR part 350.

Questions for Risk Management Section (Proposed § 350.6)

The FDIC requests comment on the risk management requirements contained in proposed § 350.6, including the following:

Question 79: Should the FDIC streamline proposed § 350.6(a) by replacing it with a high-level requirement that the PPSI establish a prudent risk management framework commensurate with its size, complexity, and risk, including appropriate risk management frameworks to manage liquidity and interest rate risk? If so, should it, also at a higher level than proposed, specify that such risk management framework include risk assessment, internal controls, organizational structure with clear lines of authority and responsibility, and an internal audit system?

Question 80: Are the risk management standards included in proposed § 350.6 appropriate? Are there any the FDIC should remove or modify? Are there any risk management standards the FDIC should add?

Question 81: Are the liquidity risk management requirements in proposed § 350.6(a)(7) unnecessary, given the requirements that are proposed in § 350.4?

Question 82: Should the risk management standards under proposed § 350.6(a) provide for clear management roles, responsibilities, and accountability?

the FDIC should remove or modify? Are there any risk management standards the FDIC should add?

Question 81: Are the liquidity risk management requirements in proposed § 350.6(a)(7) unnecessary, given the requirements that are proposed in § 350.4?

Question 82: Should the risk management standards under proposed § 350.6(a) provide for clear management roles, responsibilities, and accountability? Should the standards include any requirements for the PPSI's board of directors and senior management to maintain appropriate competence and experience relevant to its activities? If so, should any standards regarding competence and experience be similar to the considerations set forth in section 5(c)(3) of the GENIUS Act?

Question 83: Should proposed § 350.6(b) expressly address risks relating to smart contracts, encryption, tokenized assets, or any other technology or procedure? Are there standards which were included but are not relevant to PPSIs?

Question 84: Are the restrictions on insider and affiliate transactions in proposed § 350.6(a)(5) appropriate? What modifications, if any, are warranted? Should there be similar restrictions applied to transactions with the parent IDI? Should there be limitations on the ability of a parent IDI to “bail out” a subsidiary PPSI during stress? What are the pros and cons of permitting such actions? Should the requirements include any prescriptive qualitative or quantitative limits? Should certain transactions require approval by the board of directors?

Question 85: Should the FDIC require PPSIs to take any steps to manage risks related to customer-facing operational issues, such as with respect to fraud, unauthorized activity, customer disputes, or service disruptions?

Question 86: To what extent are the requirements in proposed § 350.6 consistent with other actions the FDIC is taking to make supervision less process-focused and more focused on financial risks?

8. Audits, Reports, and Supervision (Proposed § 350.7)

Section 6(a)(1) of the GENIUS Act (12 U.S.C

s, such as with respect to fraud, unauthorized activity, customer disputes, or service disruptions?

Question 86: To what extent are the requirements in proposed § 350.6 consistent with other actions the FDIC is taking to make supervision less process-focused and more focused on financial risks?

8. Audits, Reports, and Supervision (Proposed § 350.7)

Section 6(a)(1) of the GENIUS Act (12 U.S.C. 5905(a)(1)) subjects PPSIs to the supervision of the FDIC. Section 6(a)(3) of the GENIUS Act (12 U.S.C. 5905(a)(3)) requires the FDIC to examine PPSI s to assess: (i) the nature of the operations and the financial condition of the PPSI; (ii)the financial, operational, technological, compliance, and other risks associated with the PPSI that may pose a threat to the safety and soundness of the PPSI or the stability of the financial system of the United States; and (iii) the systems of the PPSI for monitoring and controlling the risks. Pursuant to section 6(a)(4) of the GENIUS Act (12 U.S.C. 5905(a)(4)), in supervising and examining a PPSI, the FDIC shall, to the fullest extent possible, use existing reports and other supervisory information, avoid duplication, and shall only request examinations at a cadence and in a format that is similar to that required for similarly situated entities regulated by the FDIC.

Examinations

Proposed § 350.7(a) outlines that the FDIC will fulfill its examination responsibilities, pursuant to Section 6(a)(3) of the GENIUS Act (12 U.S.C. 5905(a)(3)), and will do so consistent with existing examination timelines established for the parent IDI outlined in § 337.12 of the FDIC Rules and Regulations, which generally require the FDIC to conduct examinations at least once during each 12-month period, but may be conducted at least once during each 18-month period if certain conditions outlined in § 337.12(b) are met by the parent IDI. Consistent with section 6(a)(3) of the GENIUS Act (12 U.S.C

ination timelines established for the parent IDI outlined in § 337.12 of the FDIC Rules and Regulations, which generally require the FDIC to conduct examinations at least once during each 12-month period, but may be conducted at least once during each 18-month period if certain conditions outlined in § 337.12(b) are met by the parent IDI. Consistent with section 6(a)(3) of the GENIUS Act (12 U.S.C. 5905(a)(3)), the scope of the examination will include: (i) an assessment of the nature of the operations and financial condition of the PPSI; (ii) the financial, operational, technological and other risks associated within the permitted payment stablecoin; and (iii) the systems (including practices) for monitoring and controlling those risks. Such examinations will review compliance with laws and regulations and assess overall safety and soundness.

Proposed § 350.7(b) of the proposed rule requires that, upon request by the FDIC, PPSIs must grant the FDIC prompt and complete access to all officers, directors, employees, agents, and relevant books, records, or documents of any type, including distributed ledgers. The FDIC, through its examination authority over State nonmember banks and State savings associations, has authority to make a thorough examination. 24 Sections 6(a)(1) and (3) of the GENIUS Act (12 U.S.C. 5905(a)(1), (3)) give the FDIC similar authority to supervise and examine PPSIs. Proposed § 350.7(b) proposes that the books and records of a PPSI include, but are not limited to, information retained on distributed ledgers. Proposed § 350.7(b) applies the FDIC's supervisory and examination approach of access to all books and employees to perform adequate examination and supervision to PPSIs similarly to State nonmember banks and State savings association. Additionally, proposed § 350.7(c) clarifies that the FDIC may conduct examinations either on-site or remotely.

24 12 U.S.C. 1820(b), (c)

IC, pursuant to the FDIC's authorities in section 6(a)(2) of the GENIUS Act (12 U.S.C. 5905(a)(2)). The FDIC is seeking comment on what the FDIC should require. The requirement could include information regarding required reserves, issuance and redemption, and other relevant information. The FDIC understands that this type of information is currently monitored on an ongoing basis by existing PPSIs. Such reporting includes additional or more frequent information beyond the composition report that would be required in proposed § 350.4(g) and the quarterly financial condition reporting required in proposed § 350.7(h) and will allow the FDIC to more effectively supervise PPSIs to identify changes in risk profile and financial condition between examinations, in a timely manner, and to more efficiently supervise PPSIs by facilitating risk scoping.

Proposed § 350.7(h) would require PPSIs to submit quarterly reports of financial condition to the FDIC in a standardized format to be established by the FDIC, pursuant to the FDIC's authorities in sections 6(a)(1) and (2) of the GENIUS Act (12 U.S.C. 5905(a)(1)-(2)). The reports of financial condition would be required within 30 days of the end of the prior quarter and will include an income statement, balance sheet, reserves, statement of changes in equity, issuance value, and assets under custody, among other things. These reports of financial condition are intended to replicate, in a streamlined manner, the quarterly Consolidated Reports of Condition and Income (commonly referred to as the Call Report). Similar to the Call Report, the FDIC intends to publish the information for public use and intends to require the chief financial officer (or the individual performing an equivalent function) of the PPSI to attest to the accuracy of the filing. In addition, the FDIC would require directors and senior management of the PPSI, other than the officer signing the chief financial officer declaration, to attest to the accuracy of the report of financial condition

nnual financial statement, obtain an audit of that financial statement, and make the audited annual financial statement publicly available and submit it to the FDIC. Under the proposed rule, each PPSI with more than $50,000,000,000 in total outstanding issuance value, that is not subject to the reporting requirements under section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)), is required to prepare an annual financial statement, in accordance with GAAP, and which shall include the disclosure of any related party transactions, as defined by GAAP. Consistent with section 4(a)(10)(A)(ii) of the GENIUS Act (12 U.S.C. 5903(a)(10)(A)(ii)), proposed § 350.7(j)(1) would require a registered public accounting firm to audit and report on the annual financial statements. While section 4(a)(10)(A)(ii) of the GENIUS Act (12 U.S.C. 5903(a)(10)(A)(ii)) requires that such audit be performed in accordance with all applicable auditing standards established by the Public Company Accounting Oversight Board (PCAOB), proposed § 350.7(j)(1) seeks to provide additional flexibility relevant for non-public entities that would allow the audit to be performed either in accordance with generally accepted auditing standards or PCAOB auditing standards. Also, while Section 4(a)(10)(A)(i) of the GENIUS Act (12 U.S.C. 5903(a)(10)(A)(i)), is limited to a PPSI that is not subject to the reporting requirements under section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)), the FDIC interprets section 4(a)(10)(A)(iii) of the GENIUS Act (12 U.S.C. 5903(a)(10)(A)(iii)) to mean those “applicable auditing standards” would apply if the PPSI were subject to the reporting requirements under section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)). Also, the FDIC may at any time request that a registered public accounting firm provide to the FDIC certain additional information or documents relating to information provided by the PPSI

upervision provisions contained in proposed § 350.7, including the following:

Question 87: Should the FDIC modify any aspects of the examination requirements under proposed § 350.7 for PPSIs? If so, what examination requirements should be modified, and why?

Question 88: Proposed § 350.7(d) provides the FDIC authority to conduct examinations of any PPSI as frequently as the FDIC deems necessary. Should the proposal include criteria that the FDIC should consider when exercising its authority to conduct more frequent examinations?

Question 89: Should the FDIC coordinate examinations with other appropriate primary Federal payment stablecoin regulators in the event a PPSI participates in a consortium of multiple entities supervised by more than one primary Federal payment stablecoin regulator? If so, should it utilize existing processes? If no, how should coordination be structured?

Question 90: Should the FDIC modify any aspects of the proposed reporting requirements under proposed § 350.7 for PPSIs? If so, what reporting requirements should be modified, and why? Are any changes needed to the frequency or content of required reports?

Question 91: In proposed § 350.7(g), the FDIC proposes to collect confidential weekly data from PPSIs. The weekly data could include some or all of the following: (i) outstanding issuance value; (ii) reserve assets; (iii) redemptions; (iv) minting and issuance; (v) exchanges on which the payment stablecoin trades; (vi) the largest holders of the payment stablecoin; (vii) data concerning securities held as reserve assets (including information regarding reserve assets' CUSIPs, yield, weighted average maturity and weighted average life); and (viii) information regarding repurchase agreements and reverse repurchase agreements (including information regarding the counterparty, clearing agency, collateral, and interest)

vised IDIs. These elements consist of common equity, retained earnings, and noncumulative perpetual preferred stock that meet certain terms designed to ensure significant loss-absorbing capabilities. FDIC-supervised IDIs that may seek to establish PPSI subsidiaries are generally familiar with the long-standing criteria for capital instruments to qualify under the existing 12 CFR part 324 framework.

Common equity tier 1 capital would consist of common stock instruments (par value, if any, and related surplus), retained earnings, and any accumulated other comprehensive income (AOCI), all as reported under GAAP. Common stock instruments would need to meet various proposed criteria, including being the most subordinated claim on the PPSI's assets, being fully paid-in, having no maturity date, and not being redeemable except with prior FDIC approval. Any dividends must be fully discretionary, paid out only after fulfillment of any other legal or contractual obligations. In addition, the holders of the instruments must bear losses equally, proportionally, and simultaneously with other holders of common stock instruments. As the most subordinated tier of regulatory capital, common equity tier 1 exhibits the most loss absorbency, as any dividends are discretionary and there is no expectation of redemption or repurchase of the instrument, ensuring any operating funds generated can be used for any other business need of the PPSI.

The FDIC also is proposing to include AOCI as a component of common equity tier 1 capital. Unlike in 12 CFR part 324, the FDIC is not proposing to permit any neutralization of AOCI. The FDIC permits neutralization of components of AOCI under part 324 for most banks in part to reduce regulatory capital volatility associated with changes in value of available-for-sale fixed income securities due to changes in interest rates. Changes in value due to interest rate movements are generally larger for securities with longer remaining maturities

novo period, the FDIC may adjust a PPSI's minimum capital requirement based on a comparison of its actual operations to the projections provided as part of the application. During this time, and afterward, the PPSI also would be required to assess its own capital adequacy and maintain an amount of capital that is commensurate with its business model and risk profile, subject to review by the FDIC.

The FDIC would consider the proposed PPSI's risk profile, business strategy, future growth prospects, and cushions for unexpected losses. As part of the approval process and during the de novo period, the FDIC would consider factors including: (i) the composition, stability, and direction of revenue; (ii) the level and composition of expenses; (iii) the level of retained earnings; (iv) the quantity and direction of strategic risk; (v) the quantity of transaction risk from delivery and administration of asset management products and services; and (vi) the impact of external factors, including economic conditions and evolving technology.

The proposed rule also proposes a floor of $5 million on the minimum capital requirement during the de novo period. This floor is primarily intended to ensure that a PPSI has sufficient resources to support initial operations, including resources sufficient to cover any losses that are expected to occur early in the launch of a new payment stablecoin.

In addition to the capital requirement established by the FDIC for the de novo period, the proposed rule would also require a PPSI to calculate a minimum capital requirement based on a thorough evaluation of the risks associated with its business model and risk profile. This amount would be based on estimates submitted during the application phase, and after approval, this amount must incorporate the operating history of the PPSI and losses experienced from all sources, including, but not limited to, operational risk

f reserve assets that presented material risks the FDIC would expect higher capital requirements.

Although the FDIC is not currently proposing to establish any specific minimum capital amount or ratio by regulation, or a framework for determining a minimum capital requirement, the FDIC is seeking comment on whether to implement such a framework for determining more objective capital requirements.

Under proposed § 350.9(b), the FDIC is proposing that a PPSI hold an operational backstop comprised of a designated pool of highly liquid assets to maintain the ongoing operations of the PPSI during a business disruption. The operational backstop would be independent of the de novo and ongoing capital requirements, and the assets that comprise the backstop would be separate from assets held as reserve assets. The purpose of the proposed operational backstop would be to help ensure that, during a business disruption that impacts operations of a PPSI, the PPSI has on hand a pool of liquid assets, separate from reserve assets, that can be used to meet short term liquidity needs, stabilize the PPSI after the disruption, and continue or resume normal operations. The operational backstop would be calculated based on the actual total expenses of the PPSI over the past 12 months. These expenses, including for utilities, data processing, and salaries, are highly correlated with a PPSI's ability to maintain ongoing operations for the benefit of payment stablecoin holders and stabilize from a business disruption. At a minimum, the operational backstop could provide a basis for a more orderly runway for a PPSI to develop and execute potential stabilization actions or prepare for resolution. The amount of the operational backstop would be calculated each quarter, based on a PPSI's total expenses as reported in the four most recent quarterly reports filed under proposed § 350.7 of the proposed rule

day of each quarter and disclosed in the reports required under proposed § 350.7 of the proposed rule. Under proposed § 350.9(c), if a PPSI does not meet the minimum capital requirement or have sufficient liquid assets to meet the operational backstop at the end of a quarter, it must notify the FDIC in writing and provide a description of the measures it intends to take to remediate the shortfall. If the FDIC determines that such measures are not viable, the FDIC may direct a PPSI to take other remediative measures, including directing the PPSI to issue additional capital instruments or acquire additional liquid assets for the operational backstop, suspend or reduce

Individual Additional Capital or Backstop Requirement (Proposed § 350.10)

Proposed § 350.10 addresses individual additional capital or operational backstop requirements. As permitted by section 4(a)(4)(B)(i) of the GENIUS Act (12 U.S.C. 5903(a)(4)(B)(i)), to address cases where the PPSI's internal capital adequacy assessment is deficient in addressing the capital needs of the PPSI, or where the PPSI's available liquid assets are insufficient to ensure ongoing operations, the FDIC is proposing a process to impose on a PPSI an individual additional capital or operational backstop requirement.

Proposed § 350.10(a) includes a list of examples intended to illustrate when the FDIC may consider imposing an individual additional capital or operational backstop requirement. These include when there has been a significant increase in operational risks, excessive volatility in payment stablecoin issuance or redemptions, or additional risks that the PPSI is not appropriately reflecting in its ongoing capital adequacy assessment framework. While an individual capital or backstop requirement would be based on the facts of each individual case, proposed § 350.10(b) would describe the factors that the FDIC may consider

ed to hold any amount of regulatory capital with respect to such PPSI subsidiary and its assets and operations in excess of the capital that such PPSI must maintain under the capital requirements issued pursuant to the GENIUS Act. This approach would also ensure that any undistributed retained earnings of the PPSI are not double-counted as capital that can be used by the parent FDIC-supervised IDI.

However, because the proposed approach would not deduct the full amount of an FDIC-supervised IDI's investment in its PPSI subsidiary, there may be incentives for an FDIC-supervised IDI to contribute more capital to its PPSI subsidiary (in the form of permissible reserve assets for PPSIs) than necessary to prudently operate the PPSI subsidiary as a mechanism to inflate the capital ratios of the FDIC-supervised IDI. The FDIC

Consequently, the FDIC intends, through its supervision of FDIC-supervised IDIs and PPSIs, to monitor the balance sheet management activities of FDIC-supervised IDIs and their PPSI subsidiaries to ensure that an FDIC-supervised IDI does not use the balance sheet of its PPSI subsidiary to inappropriately inflate the regulatory capital ratios of the FDIC-supervised IDI. In this regard, the FDIC maintains the authority under 12 CFR 324(d)(1) to require an FDIC-supervised IDI to hold an amount of regulatory capital greater than otherwise required under 12 CFR part 324 if the capital requirement under part 324 is not commensurate with the FDIC-supervised IDI's credit, market, operational, or other risks. If the FDIC were to determine that contributions of assets by an FDIC-supervised IDI to its PPSI subsidiary appear indicative of an intent to inflate the capital ratios of the IDI rather than serve the operations and/or business needs of the PPSI, the FDIC would expect to require the FDIC-supervised IDI to hold an additional amount of regulatory capital commensurate with such disproportionate contribution of assets

posing an individual additional capital or operational backstop requirements appropriate and sufficiently clear? What modifications, if any, are appropriate? Are there modifications to the process that are appropriate? Is the process too long or too short?

Question 108: With respect to the assets eligible for the operational backstop, the proposal would allow demand deposits at an IDI to qualify. Should this be limited to only fully insured deposits?

Question 109: Does the proposed deconsolidation and deduction approach appropriately balance the FDIC's statutory obligations under the GENIUS Act with other statutory requirements to establish risk-based and leverage capital requirements for FDIC-supervised IDIs? If not, what changes or alternatives should the FDIC consider?

Question 110: Instead of the proposed approach, should the FDIC require an FDIC-supervised IDI that includes a consolidated PPSI subsidiary to treat a PPSI subsidiary for regulatory capital purposes in the same manner that it is required to treat a financial subsidiary? This would require the FDIC-supervised IDI to deconsolidate the assets and liabilities of the PPSI subsidiary, exclude the amount of its investment in the PPSI subsidiary from its total risk-weighted assets, average total consolidated assets, and other applicable exposure measures, and deduct the amount of its investment in the PPSI subsidiary from its common equity tier 1 capital. On the one hand, this approach would ensure that the FDIC-supervised IDI's investment in its PPSI subsidiary does not increase the capital of the FDIC-supervised IDI, thus avoiding any double counting of capital

nt do commenters agree with the FDIC's characterization of the potential that an FDIC-supervised IDI could utilize a subsidiary PPSI under the proposed approach to inflate the capital ratios of the parent IDI? What are the advantages and disadvantages of the supervisory actions the FDIC would expect to take upon determining that the contribution of assets by an FDIC-supervised IDI to its PPSI subsidiary appeared indicative of an intent to improve the regulatory capital position of the IDI rather than serve the operations and/or business needs of the PPSI? Are there other measures the FDIC could adopt to address such concerns? Would treating PPSI subsidiaries as financial subsidiaries for regulatory capital purposes, as discussed above, be a preferable approach?

B. Subpart B—Requirements for FDIC-Supervised Entities Engaged in the Custody or Safekeeping of Payment Stablecoin Reserves and Collateral

The FDIC proposes to establish subpart B to implement the custodial and safekeeping requirements outlined in section 10 of the GENIUS Act (12 U.S.C. 5909) with respect to FDIC-supervised entities.

1. Purpose and Scope (Proposed § 350.100)

Proposed § 350.100 sets forth the purpose and scope of the custodial and safekeeping regulations in subpart B. The subpart B requirements would apply to persons subject to supervision and regulation by the FDIC, including insured State nonmember banks, insured State-licensed branches of foreign banks, insured State savings associations, and PPSIs, for which the FDIC is the primary Federal banking agency or primary Federal payment stablecoin regulator, that are engaged in the business of providing custodial or safekeeping services for payment stablecoin reserves, payment stablecoins used as collateral, or private keys used to issue payment stablecoins pursuant to sections 4(a)(7)(A)(iv) and 10 of the GENIUS Act (12 U.S.C. 5903(a)(7)(A)(iv) and 5909)

governing those relationships, and any applicable court order.

Custody agreement. The proposed rule would define “custody agreement” to mean a legally binding contractual agreement between a customer, as the principal, and the custodian, as the agent, that establishes the custodian's duties and responsibilities in providing custody, safekeeping and ancillary services to the customer.

Customer. The proposed rule would define “customer” to mean a person for whom or on whose behalf a custodian receives, acquires, or holds payment stablecoin reserves, payment stablecoins used as collateral, private keys, cash, and other property received in the course of the provision of custody services for such assets. This definition is consistent with the description of the term “customer” used in section 10(b) of the GENIUS Act (12 U.S.C. 5909(b)). The proposed “customer” definition under part 350 subpart B only applies to part 350, subpart B. 27

27 The proposed “customer” definition under part 350, subpart B is not intended to affect any GENIUS Act requirements promulgated to implement the GENIUS Act's direction to treat PPSIs as financial institutions for purposes of the Bank Secrecy Act and to apply Federal law applicable to a financial institution located in the United States relating to the prevention of money laundering, including customer identification program or customer due diligence requirements applicable to PPSIs. See 12 U.S.C. 5093(a)(5)(A).

Custodian. The proposed rule would define “custodian” to mean an FDIC-supervised person, including an insured State nonmember bank, insured State-licensed branch of a foreign bank, insured State savings associations, or a PPSI. This proposed definition specifies the FDIC-supervised entities that are permitted to provide custodial and safekeeping services as provided under section 10(a) of the GENIUS Act (12 U.S.C. 5909(a)).

Digital wallet

ustodian” to mean an FDIC-supervised person, including an insured State nonmember bank, insured State-licensed branch of a foreign bank, insured State savings associations, or a PPSI. This proposed definition specifies the FDIC-supervised entities that are permitted to provide custodial and safekeeping services as provided under section 10(a) of the GENIUS Act (12 U.S.C. 5909(a)).

Digital wallet. The proposed rule would define “digital wallet” to mean a software program or hardware device that stores and manages the private keys associated with a particular unit of a digital asset.

Person. The proposed rule would define “person” to mirror section 2(24) of the GENIUS Act (12 U.S.C. 5901(24)), and the term would mean an individual, partnership, company, corporation,

Permitted payment stablecoin issuer. The proposed rule would define “permitted payment stablecoin issuer” to have the meaning given that term in section 2(23) of the GENIUS Act (12 U.S.C. 5901(23)).

Private keys. The proposed rule would define “private keys” to mean the unique alphanumeric sequence that allows for a transfer of a particular unit of a digital asset using a distributed ledger.

Sub-custodian. The proposed rule would define “sub-custodian” to mean a person that provides custody and safekeeping services to a custodian, including through a digital wallet for which such person controls the associated private keys, with respect to assets of a customer, for which the custodian otherwise serves as an agent under this subpart.

3. Severability (Proposed § 350.102)

Similar to subpart A, subpart B would include a severability clause in proposed § 350.102 that would provide that the provisions of subpart B are separate and severable from one another. In the event a court stays a particular provision of this rule or determines any provision is invalid, the FDIC intends that the remaining provisions shall continue in effect.

4

of the GENIUS Act (12 U.S.C. 5909(b)(2)), which requires a custodian to take appropriate steps to protect the customer's property from the claims of the custodian's creditors. Moreover, the requirements in proposed § 350.103(b) incorporate appropriate risk management principles that are consistent with safe and sound practices expected for institutions providing custodial and safekeeping services. 28

28 See e.g., Joint Statement on Crypto-Asset Safekeeping by Banking Organizations (July 14, 2025), https://www.fdic.gov/interagency-statement-crypto-asset-safekeeping.pdf.

Section 350.103(c)(1) of the proposed rule would require a custodian to maintain possession or control of the customer's property that is held directly, including in a digital wallet for which the custodian controls the associated private keys. The proposed rule would further provide that a custodian could maintain the customer's property through the use of a sub-custodian if consistent with applicable law, provided the custodian maintains adequate safeguards and internal controls reasonably designed to provide the custodian with oversight of such sub-custodian's compliance with the requirements of subpart B.

With respect to any payment stablecoin or tokenized reserve asset, proposed § 350.103(c)(2) provides that a custodian or sub-custodian maintains control if it can it can reasonably demonstrate, consistent with the standard of care established by applicable law that no other party, including the customer or any affiliate of the custodian, can control or transfer the payment stablecoin or payment stablecoin reserve in the form of an asset in tokenized form using a distributed ledger without the affirmative consent of the custodian or sub-custodian, as applicable. The custodian must have technical safeguards to prevent unauthorized access by its own personnel. This provision would be consistent with past interagency guidance regarding control of crypto assets for purposes of safekeeping 29 and necessary to protect a customer's assets

sured State nonmember bank, insured State-licensed branch of a foreign bank, or insured State savings association that provides custodial or safekeeping services, for convenience, to hold payment stablecoin reserves, stablecoins, cash, and other property of a customer within a single omnibus account containing assets of other customers so long as the payment stablecoin reserves remain identifiable. Proposed § 350.104(b)(2) would allow an insured State nonmember bank, insured State-licensed branch of a foreign bank, or insured State savings association that provides custodial or safekeeping services for payment stablecoin reserves in the form of cash to hold such cash in the form of a deposit liability, provided such treatment is consistent with applicable law. Proposed § 350.104(b)(3) allows a custodian to withdraw and apply the share necessary of the payment stablecoin reserves, payment stablecoins, cash, and other property of a customer to cover routine operational needs of the custodian, such as paying commission, taxes, storage fees, or other lawful charges. For each of these exceptions in proposed § 350.104(b)(1) through (b)(3), the custodian should follow safe and sound practices and remain consistent with applicable laws and regulations.

6. Reporting

Under section 10(d) of the GENIUS Act (12 U.S.C. 5909(d)), the FDIC may require a custodian to provide information, in a form and manner determined by the FDIC, concerning the custodian's business operations and processes to protect customer assets

b)(1) through (b)(3), the custodian should follow safe and sound practices and remain consistent with applicable laws and regulations.

6. Reporting

Under section 10(d) of the GENIUS Act (12 U.S.C. 5909(d)), the FDIC may require a custodian to provide information, in a form and manner determined by the FDIC, concerning the custodian's business operations and processes to protect customer assets. The FDIC recognizes that while IDIs currently provide reporting on their custodial businesses pursuant to Schedule RC-T of the Call Report,

Questions for Subpart B, §§ 350.100-350.104)

The FDIC requests comment on the custodial requirements contained in proposed part 350, subpart B, including the following:

Question 113: Are the subpart B proposed definitions appropriate and sufficiently clear? Would it be helpful to define any other terms?

Question 114: FDIC's proposed subpart B would implement section 10 of the GENIUS Act (12 U.S.C. 5909) with respect to entities that are regulated by the FDIC. Are there issues that the FDIC should bear in mind if an FDIC-supervised entity holds reserve assets on behalf of a PPSI that is not regulated by the FDIC?

Question 115: The FDIC proposes principles-based requirements in line with sound custodial management practices that the FDIC understands are industry standard. Does the proposal accurately capture sound custodial management practices that are industry standard? Why or why not? Are there any additional practices or standards that FDIC should consider?

Question 116: Is it sufficiently clear in a custodial relationship when and for what assets the minimum, principles-based requirements of subpart B would apply? Are there circumstances where a custodian may be unaware that payment stablecoin reserve assets held in an account are being used as collateral and potentially subject to the requirements of subpart B?

Question 117: The proposed rule describes how a custodian maintains control of payment stablecoin reserve assets

or what assets the minimum, principles-based requirements of subpart B would apply? Are there circumstances where a custodian may be unaware that payment stablecoin reserve assets held in an account are being used as collateral and potentially subject to the requirements of subpart B?

Question 117: The proposed rule describes how a custodian maintains control of payment stablecoin reserve assets. Is this description appropriately calibrated? Are there other means by which a custodian should be deemed to have demonstrated control over these types of assets?

Question 118: Are there additional considerations the FDIC should take into account regarding a custodian's use of an omnibus account? To what extent should the FDIC consider prescribing additional recordkeeping, customer account, disclosure, or other terms or conditions as a precondition to a custodian commingling payment stablecoin reserve assets and other custodial assets?

Question 119: Section 10(c)(3) of the GENIUS Act (12 U.S.C. 5909(c)(3)) provides a priority regime regarding the claims of customers against a custodian with regards to any payment stablecoins used as collateral. The section also allows customers to expressly waive this priority. What are the potential benefits and drawbacks of such a priority regime, including with regards to whether it may amplify losses PPSIs on payment stablecoin reserves that are custodied by a custodian that provides a diversified custodial business should there be a shortfall in a custodian's custodied assets? What market practices are likely to arise regarding the use of the contractual provisions that waive a customer's priority regarding payment stablecoins used as collateral that are held in custody? To what extent should the FDIC consider either providing guidance on the use of such contractual provisions or requiring custodians to use such contractual provisions in their custody agreements? How are customer waivers in relation to custodians likely to impact the resolution of PPSIs? For example, would the

er's priority regarding payment stablecoins used as collateral that are held in custody? To what extent should the FDIC consider either providing guidance on the use of such contractual provisions or requiring custodians to use such contractual provisions in their custody agreements? How are customer waivers in relation to custodians likely to impact the resolution of PPSIs? For example, would they lead to additional complications in determining the priority of claims?

Question 120: The GENIUS Act provides an exclusion from the custodial requirements to any person solely on the basis that such person engages in the business of providing hardware or software to facilitate a customer's own custody, known commonly as “self-custody,” or safekeeping of the customer's payment stablecoins or private keys. Should the FDIC consider implementing language to prevent this exception from being used to evade the custodial requirements of the Act?

Question 121: Are there particular circumstances for which the FDIC should provide additional clarification as to the application of subpart B or the applicability of any exception ( e.g., regarding payment stablecoins locked in a smart contract for purposes of “wrapping” the payment stablecoin for use on an unsupported blockchain)?

Question 122: To ensure that a PPSI is able to meet redemptions on a timely basis, should the FDIC require that any custody agreement a custodian enters into with a PPSI provide for release of any custodied payment stablecoin reserve assets to the customer's control within a specific timeframe? What are the costs and benefits of any such approach?

Question 123: Should the FDIC require custodians to report on a separate form information regarding custodial and safekeeping services for payment stablecoin reserves, payment stablecoins used as collateral, or private keys used to issue payment stablecoins? Should the form request information regarding total payment stablecoin reserves, payment stablecoins used as collateral, or private keys used to issu

123: Should the FDIC require custodians to report on a separate form information regarding custodial and safekeeping services for payment stablecoin reserves, payment stablecoins used as collateral, or private keys used to issue payment stablecoins? Should the form request information regarding total payment stablecoin reserves, payment stablecoins used as collateral, or private keys used to issue payment stablecoins under custody? For payment stablecoin reserves under custody, should the FDIC require custodians to report the payment stablecoin reserves under custody (for affiliates and third parties), including payment stablecoin reserves held in each of the permitted categories of reserve assets proposed in § 350.4? Is there additional information the FDIC should include? If other forms of reporting would be helpful, what are they? What are the costs and benefits of requiring separate reporting?

Question 124: To what extent is Schedule RC-T of the Call Report, in the case of FDIC-supervised IDIs relevant to custodial or safekeeping services for payment stablecoin reserves, payment stablecoins used as collateral, or private keys used to issue payment stablecoins? Should revisions to Schedule RC-T or other Call Report Schedules be made to require information relevant to custodial or safekeeping services for payment stablecoin reserves, payment stablecoins used as collateral, or private keys used to issue payment stablecoins? If so, what changes should be made? What are the costs and benefits of more detailed reporting requirements?

C. Proposal To Clarify Deposit Insurance Coverage for Reserve Deposits

Reserve assets backing payment stablecoins are an important component of the statutory framework established by the GENIUS Act. Through this proposal, the FDIC is seeking to clarify the treatment for such reserves for deposit insurance purposes

poration, or subject to share insurance by the National Credit Union Administration,” and it is unlawful to make contrary representations. 32

32 12 U.S.C. 5903(e)(1), (2).

These provisions appear to be inconsistent with providing deposit insurance to payment stablecoin holders on a pass-through basis. When the FDIC insures deposits on a pass-through basis, it treats end customers as depositors. Treating payment stablecoin holders as the insured depositors on a pass-through basis seems inconsistent with the GENIUS Act's prohibition on payment stablecoins being “subject to Federal deposit insurance.” Additionally, third parties that establish pass-through insurance arrangements often market the availability of FDIC deposit insurance to their customers, which is consistent with the principle that a third party offering pass-through insurance is effectively offering an access mechanism to an FDIC-insured deposit account. The GENIUS Act's firm prohibition on marketing payment stablecoins as subject to deposit insurance seems inconsistent with the concept of payment stablecoins serving as an access mechanism for FDIC-insured deposit accounts. Moreover, the fact that a payment stablecoin holder would generally engage in transactions by transferring payment stablecoins, without funds ever leaving the FDIC-insured deposit account, further differentiates payment stablecoin arrangements from existing pass-through arrangements in which funds generally are withdrawn from the deposit account when transactions are made.

Description of the Proposed Rule (Proposed § 330.11(a)(3))

For reasons discussed above, the FDIC proposes to amend its deposit insurance rules, found in part 330 of the FDIC's regulations, to clarify that deposits held as reserves for a payment stablecoin are not insured to payment stablecoin holders on a pass-through basis. Under the proposed rule, such deposits would be insured as corporate deposits of their owner, the PPSI

e (Proposed § 330.11(a)(3))

For reasons discussed above, the FDIC proposes to amend its deposit insurance rules, found in part 330 of the FDIC's regulations, to clarify that deposits held as reserves for a payment stablecoin are not insured to payment stablecoin holders on a pass-through basis. Under the proposed rule, such deposits would be insured as corporate deposits of their owner, the PPSI. The FDIC proposes to amend its deposit insurance rules for corporate accounts, found at 12 CFR. 330.11(a), to expressly include within their scope deposits held as reserves backing payment stablecoins.

The proposed rule would add a new paragraph (3) to 12 CFR 330.11(a). This new paragraph would provide that notwithstanding any other provision of part 330, deposits at an IDI held as reserves for a payment stablecoin, as defined in the GENIUS Act, are deposits of the PPSI and insured as corporate deposits. Section 330.11(a)(1) generally provides that deposits of a corporation engaged in any independent activity are added together and insured up to the SMDIA, currently $250,000, in the aggregate. 33 Under the proposed rule, all deposits maintained by a PPSI at an IDI would be added together for purposes of the deposit insurance limit, regardless of whether those deposits consist of reserves backing payment stablecoins or serve some other purpose (such as paying the PPSI's operating expenses). The PPSI's deposits would not be insured to payment stablecoin holders on a pass-through basis.

33 The deposit insurance regulations define being engaged in an “independent activity” to mean that the corporation is operated primarily for a purpose other than to increase deposit insurance coverage. 12 CFR. 330.1(g). The FDIC has historically interpreted “corporation” broadly for purposes of section 330.11 to include similar forms of organizations established under State law, such as limited liability companies

s of PPSIs?

Question 128: If payment stablecoin reserves are eligible for pass-through deposit insurance, what impact would that have on the Deposit Insurance Fund?

Question 129: If payment stablecoin reserves are eligible for pass-through deposit insurance, how would that impact the risk of a PPSI's risk of failure?

Question 130: Should the availability of pass-through insurance or lack

D. Proposal To Clarify Treatment of Deposits in Tokenized Form

The GENIUS Act establishes a Federal regulatory framework for the issuance of payment stablecoins and related payment stablecoins activities; the Act does not address tokenized deposits, other than to provide that the definition of “payment stablecoin” does not include, among other things, a deposit, including a deposit recorded using distributed ledger technology. 34 Although payment stablecoins and tokenized deposits can both be used as a means of payment and can use the same underlying technological components and characteristics, payment stablecoins and tokenized deposits are economically and legally distinct. Payment stablecoins generally represent a PPSI's liability where the promise to redeem and to maintain a stable value is backed by highly liquid, short-term, and safe assets (including deposits) held in reserve to mitigate concerns of counterparty risk.

34 See 12 U.S.C. 5901(22).

A tokenized deposit, on the other hand, is an IDI's deposit liability represented in a particular way: in tokenized form and recorded on a distributed ledger technology. Like other deposits, tokenized deposits fund a bank's extensions of credit and represent an integral part of the maturity and liquidity transformation services provided by banks. Banks are subject to extensive regulatory and supervisory requirements, and are eligible for Federal deposit insurance.

The FDIC is using this proposed rule as a vehicle to clarify the treatment of tokenized deposits under the FDI Act

sits, tokenized deposits fund a bank's extensions of credit and represent an integral part of the maturity and liquidity transformation services provided by banks. Banks are subject to extensive regulatory and supervisory requirements, and are eligible for Federal deposit insurance.

The FDIC is using this proposed rule as a vehicle to clarify the treatment of tokenized deposits under the FDI Act. Whether or not a particular tokenized financial product is considered a tokenized deposit for purposes of the FDI Act is relevant, among other things, to: (1) the applicability of deposit insurance; 35 (2) depositor preference in the event of an institution's failure and liquidation; 36 (3) regulatory reporting purposes; 37 and (4) whether it would not be subject to the GENIUS Act. 38 Accordingly, the FDIC is proposing to amend its deposit insurance rules under part 330 to clarify that the application of deposit insurance to deposits does not depend upon the technology or recordkeeping used to record a bank's deposit liabilities.

35 See 12 U.S.C. 1821(a)(1).

36 See 12 U.S.C. 1821(d)(11).

37 See 12 U.S.C. 1817(a)(9); 12 CFR 304.3 and 12 CFR part 370.

38 See 12 U.S.C. 5901(22)(B)(ii) (stating the GENIUS Act's definition of “payment stablecoin” expressly does not include a digital asset that “is a deposit (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)), including a deposit recorded using distributed ledger technology.”).

The FDI Act's definition of deposit is technology neutral, and therefore, tokenized forms of deposits are not a separate category of deposits under the statute. For an IDI's tokenized financial product to be considered a deposit, it must meet the statutory definition of “deposit” under section 3( l ) of the FDI Act (12 U.S.C. 1813( l )). The technology used in crediting an account, evidencing a deposit liability, or recording or transferring a deposit, is not a factor in applying the statutory definition

nded to provide expressly that an IDI's choice of technology or recordkeeping utilized to record deposit liabilities is not relevant to the FDIC's determination of deposit insurance coverage. 39 The intent of this proposed amendment is to accommodate institutions' potential use of technology, including blockchain and distributed ledger infrastructures, for purposes of recording deposit liabilities.

39 The FDIC currently defines “deposit account records” to include, among other things, “books and records of the institution, including records maintained by computer, which relate to the insured depository institution's deposit taking function.” 12 CFR 330.1(e).

Although a tokenized deposit is a deposit, there may be tokenized bank liabilities that are not deposits, irrespective of an intention or representation that such constitute a deposit. If a product does not meet the statutory definition of “deposit,” it is, by definition, a non-deposit product. 40 Institutions should also be mindful of the evolving characteristics and capabilities of tokenized deposits that may lead to any material changes to the underlying nature throughout a product or transaction lifecycle to ensure ongoing alignment of the underlying tokenized deposit with the FDI Act's statutory definition.

40 The FDIC defines a non-deposit product as any product that is not a “deposit,” including, but not limited to, insurance products, annuities, mutual funds, securities, and crypto-assets. 12 CFR 328.1. Although “crypto-asset” is not defined by regulation, the FDIC would not interpret it to include deposits in tokenized form.

As noted above, under the FDIC's regulations, for pass-through deposit insurance to apply, certain recordkeeping and ownership requirements must be met. 41 The FDIC seeks comment on whether any amendments to the deposit insurance rules, including the pass-through rules, are needed to address tokenized deposits

by regulation, the FDIC would not interpret it to include deposits in tokenized form.

As noted above, under the FDIC's regulations, for pass-through deposit insurance to apply, certain recordkeeping and ownership requirements must be met. 41 The FDIC seeks comment on whether any amendments to the deposit insurance rules, including the pass-through rules, are needed to address tokenized deposits. 42 For example, the pass-through insurance rules require that an IDI's deposit account records expressly indicate a relationship, such as a fiduciary or agent relationship, that provides a basis for pass-through coverage. 43 Parties often satisfy this requirement today through account titling. The pass-through rules also include specific requirements that apply where multiple levels of fiduciary relationships exist, including identification at each level of the names and interests of the person(s) on behalf of which the party at that level is acting. 44 To the extent tokenized deposit arrangements may involve different approaches to account titling or recordkeeping, the FDIC seeks comment on what clarifications to the FDIC's pass-through rules would be appropriate.

41 See 12 CFR 330.5, 330.7(a).

42 The FDIC's pass-through insurance rules support the agency's ability to carry out its statutory obligation to aggregate and insure deposits to each depositor up to the insurance limit, regardless of whether funds are held in the name of the depositor or another party. See 12 U.S.C. 1821(a)(1)(C); see also 12 U.S.C. 1821(f) (requiring the FDIC to pay deposit insurance as soon as possible following an IDI's failure).

43 12 CFR 330.5(b)(1).

44 12 CFR 330.5(b)(3)

y to carry out its statutory obligation to aggregate and insure deposits to each depositor up to the insurance limit, regardless of whether funds are held in the name of the depositor or another party. See 12 U.S.C. 1821(a)(1)(C); see also 12 U.S.C. 1821(f) (requiring the FDIC to pay deposit insurance as soon as possible following an IDI's failure).

43 12 CFR 330.5(b)(1).

44 12 CFR 330.5(b)(3).

Questions on Treatment of Deposits in Tokenized Form

The FDIC requests comment on proposed amendments that would clarify the treatment of deposits in tokenized form and the following questions regarding tokenized deposits more broadly:

Question 131: Is the FDIC's proposed amendment to part 330 clarifying that the application of deposit insurance to deposits does not depend upon the technology or recordkeeping used to record a bank's deposit liabilities appropriate? Should the FDIC consider a more narrow amendment specifically focused on tokenized deposits?

Question 132: Should the FDIC provide additional clarity regarding the treatment of tokenized deposits outside of the deposit insurance context?

Question 133: Would it be helpful for the FDIC to consider defining relevant terms related to tokenized deposits for purposes of the FDI Act, and, if so, what defined terms should be considered?

Question 134: What key characteristics of tokenized deposits might be considered in the context of whether a particular product would be considered a “deposit” under the FDI Act? Do such products, including those that represent tokenized deposits, function similarly or dissimilarly to the types of instruments considered a deposit for purposes of the FDI Act ( e.g., certificates of deposits, certified checks, cashiers' checks and other official instruments)?

Question 135: Although the statutory definition of “deposit” is technology neutral, how might technology and the evolving capabilities of tokenized deposit products, including through application of smart contracts, alter the underlying nature of a bank's liability?

s laws)? How would digital assets that represent tokenized deposits but are not themselves deposits be treated for accounting purposes; for example as an intangible asset or as cash and cash equivalents?

Question 139: What additional clarifications of existing pass-through rules are needed, if any, to address tokenized deposit arrangements? Should the FDIC's approach to tokenized deposits differ in any respect from the approach to other deposits? To what extent should the FDIC consider modifications with respect to expectations around account titling and recordkeeping? Are there particular considerations for any specific type of third-party arrangement?

IV. Expected Effects

The GENIUS Act was enacted to establish a comprehensive regulatory framework for the issuance of payment stablecoins in the United States, 45 prohibiting any person from issuing payment stablecoins in the United States unless they are a PPSI. 46 The proposed rule would implement the statutory requirements required by the GENIUS Act for entities under the FDIC's jurisdiction by establishing the requirements and standards applicable to FDIC-supervised PPSIs and IDIs. 47 Specifically, the proposed rule would operationalize statutory requirements for PPSIs related to reserve assets, capital, liquidity, and risk management, as well as requirements for FDIC-supervised custodians regarding payment stablecoin related custodial and safekeeping services.

45 12 U.S.C. 5901 et seq.

46 12 U.S.C. 5902(a).

47 12 U.S.C. 5903(a)(4)(A).

This section summarizes the analysis performed by the FDIC to estimate the economic impact of the proposed rule. For this purpose, the FDIC compares estimated economic outcomes under the proposed rule to outcomes under a baseline that resembles a world absent the proposed rule. Because the proposed rule implements the non-discretionary mandates of the GENIUS Act, the FDIC utilizes a pre-statutory baseline under which the GENIUS Act is considered unenacted

s within their regulatory jurisdiction. See, e.g., NCUA, Investments in and Licensing of Permitted Payment Stablecoins Issuers, 91 FR 6531 (Feb. 12, 2026); and OCC, Implementing the Guiding and Establishing National Innovation for U.S. Stablecoins Act for the Issuance of Stablecoins by Entities Subject to the Jurisdiction of the Office of the Comptroller of the Currency, 91 FR 10202 (Mar. 2, 2026).

50 In addition, the analysis assumes that, under the proposed rule, the Secretary of the Treasury would have adopted rules to treat PPSIs as financial institutions for purposes of the Bank Secrecy Act and applied GENIUS Act obligations, including maintenance of an effective sanctions compliance program, as required by Section 4(a)(5) of the GENIUS Act (12 U.S.C. 5903(a)(5)).

A. Scope of Affected Entities

The entities that fall under the direct scope of the proposed rule are all FDIC-supervised PPSIs, all FDIC-supervised PPSIs and IDIs that provide payment stablecoin-related custodial and safekeeping services, referred to as FDIC-supervised custodians, and all IDIs maintaining tokenized deposits or deposits held as reserves backing a payment stablecoin.

For the estimation of the scope and magnitude of the effects under both the proposed rule and the baseline, this analysis uses banking industry and financial data as of the quarter ending September 30, 2025. As of this date, the FDIC insures 4,388 IDIs, supervises 51 and supervises zero PPSIs.

51 Including insured State nonmember banks, insured State-licensed branches of foreign banks, and insured State savings associations. FFIEC Reports of Condition and Income (Call Reports), September 30, 2025.

The FDIC recognizes the significant uncertainty regarding estimates of the number of FDIC-supervised PPSIs and IDIs that would seek to issue payment stablecoins or engage in other permitted payment stablecoin activities under the proposed rule

tate-licensed branches of foreign banks, and insured State savings associations. FFIEC Reports of Condition and Income (Call Reports), September 30, 2025.

The FDIC recognizes the significant uncertainty regarding estimates of the number of FDIC-supervised PPSIs and IDIs that would seek to issue payment stablecoins or engage in other permitted payment stablecoin activities under the proposed rule. Because the regulations governing the application and approval of FDIC-supervised PPSIs are currently under development and have not yet been finalized, 52 the FDIC lacks data on the number of entities that would ultimately fall under the scope of the FDIC-supervised PPSI category, either independently or through consortia and other partnerships. Recognizing this uncertainty, without predicting the actual amount of FDIC-supervised PPSIs, for the purposes of this analysis, the FDIC estimates that between 5 and 30 FDIC-supervised IDIs would apply for and receive approval to issue payment stablecoins through FDIC-supervised PPSIs in the first few years after the enactment of the proposed rule. The population of FDIC-supervised PPSIs under the proposed rule could be higher or lower depending on market demand, strategic operational choices of FDIC-supervised entities, and future developments in the digital landscape, among many other factors. By utilizing this range, the FDIC aims to establish an estimate that serves as the basis for evaluating the economic effects of the proposed rule, while acknowledging the inherent uncertainty resulting from a lack of historical precedent.

52 The FDIC has issued a notice of proposed rulemaking regarding the application process for FDIC-supervised institutions, Approval Requirements for Issuance of Payment Stablecoins by Subsidiaries of FDIC-Supervised Insured Depository Institutions, 90 FR 59409 (Dec. 19, 2025)

public with more choices for making payments and engaging in transactions; provide regulatory clarity for FDIC-supervised IDIs seeking to issue payment stablecoins; and expand the set of opportunities related to payment stablecoin market activities. The proposed rule would effectuate this clarity through the formalization of a Federal regulatory framework for payment stablecoin related activities. By resolving uncertainty that potentially hindered innovation and constrained capital allocation within the digital asset space, the proposed rule would stimulate payment stablecoin issuance, potentially resulting in more structured growth than would have otherwise occurred under the baseline. While these benefits are inherently difficult to quantify, the FDIC anticipates they could be material to the general public, the banking sector, and the broader economy.

The proposed rule would provide the general public with more choices for making payments and engaging in transactions. To the extent payment stablecoins issued by FDIC-supervised PPSIs under the proposed rule would have lower transaction frictions or remittance costs, or added functionality, compared to other payment options available under the baseline, the proposed rule would result in transaction cost savings or other benefits for payment stablecoin holders. Lower fees due to increased competition among payment stablecoin issuers or custodians would also benefit payment stablecoin holders under the proposed rule, relative to the baseline.

The proposed rule would also benefit payment stablecoin holders by providing a more secure environment, relative to the baseline, for activities related to payment stablecoins. The proposed rule would provide payment stablecoin holders increased assurance that their payment stablecoins are subject to elevated regulatory and supervisory standards

llion.

57 Details of the burden hours for each requirement are described fully in Section VI.B.

58 Bureau of Labor Statistics: National Industry-Specific Occupational Employment and Wage Estimates: Industry: Credit Intermediation and Related Activities (5221 and 5223 only) (May 2024); Employer Cost of Employee Compensation (March 2024); and Employment Cost Index (March 2024 and September 2025). For the implementation burden associated with the proposed rule, the FDIC estimated the following labor allocation for entities complying with these requirements: Executives and Managers (11-0000): 20 percent; Lawyers (23-0000): 45 percent; Compliance Officers (13-1040): 25 percent; and IT specialists (15-0000): 10 percent. For the ongoing reporting burden associated with the proposed rule, the FDIC estimated the following labor allocation: Executives and Managers: 20 percent; Lawyers: 10 percent; Compliance Officers: 50 percent; IT specialists: 10 percent; Financial Analysts (13-2051); and Clerical workers (43-0000): 5 percent each. For the ongoing recordkeeping burden associated with the proposed rule, the FDIC estimated the following labor allocation: Executives and Managers: 15 percent; Lawyers: 5 percent; Compliance Officers: 50 percent; IT specialists: 10 percent; Financial Analysts: 15 percent; and Clerical workers: 5 percent. For the ongoing disclosure burden associated with the proposed rule, the FDIC estimated the following labor allocation: Executives and Managers: 15 percent; Lawyers: 10 percent; Compliance Officers: 50 percent; IT specialists: 10 percent; Financial Analysts: 10 percent; and Clerical workers: 5 percent.

59 The FDIC estimates that none of these PPSIs will be small for purposes of the Regulatory Flexibility Act

ng disclosure burden associated with the proposed rule, the FDIC estimated the following labor allocation: Executives and Managers: 15 percent; Lawyers: 10 percent; Compliance Officers: 50 percent; IT specialists: 10 percent; Financial Analysts: 10 percent; and Clerical workers: 5 percent.

59 The FDIC estimates that none of these PPSIs will be small for purposes of the Regulatory Flexibility Act.

Ongoing Burden

For the purpose of estimating the ongoing compliance costs under the proposed rule, each FDIC-supervised PPSI is expected to incur, on average, approximately 1,000 hours of annual burden to comply with the proposed recordkeeping, reporting, and disclosure requirements. 60 At an estimated hourly labor compensation rate of $112.31, as described above, the estimated total annual ongoing cost to FDIC-supervised PPSIs would be upwards of $3.37 million per year under the upper-bound assumption that 30 FDIC-supervised PPSIs would be approved under the proposed rule. 61

60 Details of the burden hours for each requirement are described fully in Section VI.B.

61 In addition, FDIC-supervised custodians are expected to incur approximately one hour of burden per year.

2. Broader Operational Costs to Affected Institutions

FDIC-supervised PPSIs are expected to incur operational expenses—beyond those associated with reporting, recordkeeping, and disclosure—related to the range of permitted activities that would fall under proposed § 350.3, including issuing and redeeming payment stablecoins, managing eligible reserves, and providing custodial or safekeeping services. Commensurate with their risk profile and business model, FDIC-supervised PPSIs would also be expected to incur operational costs associated with risk management, including the implementation of information technology and security practices (proposed § 350.6), and maintain minimum capital and an operational backstop (proposed § 350.9)

uirement would ensure that the expansion of the payment stablecoin market occurs within a supervised framework that prioritizes the stability of the broader financial system.

As discussed in section III.A.9, the proposed amendments to § 324.22 on regulatory capital may result in changes in the capital ratios, relative to the baseline, of an FDIC-supervised IDI with a consolidated PPSI subsidiary. The FDIC does not have the data to quantify these effects; however, the risk of inflated capital ratios through balance sheet management activities intended to improve the FDIC-supervised IDI's regulatory capital position rather than serve the operations and/or business needs of its PPSI would be mitigated by the FDIC's supervision of the parent IDI and corresponding PPSI subsidiary.

For these reasons, the FDIC does not expect that the proposed rule would increase risks to the Deposit Insurance Fund (DIF) or undermine the stability of the financial system. This expectation is in part supported by the structural requirements of the GENIUS Act and the specific prudential guardrails established in the proposed rule. By maintaining a strict legal and operational separation between payment stablecoin issuance and insured deposits, the proposed rule would ensure that the DIF would not be exposed to the specific liquidity or market risks associated with payment stablecoin redemption.

Given the economic effects discussed above, the FDIC expects that the benefits of the proposed rule justify its costs.

The FDIC invites comments on all aspects of the supporting information provided in the Expected Effects section. The FDIC is particularly interested in comments on any material economic effects that the agency has not identified.

V. Alternatives Considered

The FDIC is proposing to amend its regulations to implement certain provisions of the GENIUS Act. Because the amendments are statutorily mandated, the FDIC has not considered a “no action” alternative

formation provided in the Expected Effects section. The FDIC is particularly interested in comments on any material economic effects that the agency has not identified.

V. Alternatives Considered

The FDIC is proposing to amend its regulations to implement certain provisions of the GENIUS Act. Because the amendments are statutorily mandated, the FDIC has not considered a “no action” alternative. Although the FDIC has not developed any alternative proposals, the FDIC will consider any alternative regulatory approaches raised by commenters, especially any that are directly responsive to the questions for commenters set forth above.

VI. Regulatory Analysis

A. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency, in connection with a proposed rule, to prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of the proposed rule on small entities. 62 However, an initial regulatory flexibility analysis is not required if the agency certifies that the proposed rule would not, if promulgated, have a significant economic impact on a substantial number of small entities. The Small Business Administration (SBA) has defined “small entities” to include banking organizations with total assets of less than or equal to $850 million. 63

62 5 U.S.C. 601 et seq.

63 The SBA defines a small banking organization as having $850 million or less in assets and determines an organization's assets by averaging the assets reported on its four quarterly financial statements for the preceding year. See 13 CFR 121.201 (as amended by 87 FR 69118, effective December 19, 2022). Following these regulations, the FDIC uses an FDIC-supervised institution's affiliated and acquired assets, averaged over the preceding four quarters, to determine whether the FDIC-supervised institution is “small” for the purposes of the RFA

sets reported on its four quarterly financial statements for the preceding year. See 13 CFR 121.201 (as amended by 87 FR 69118, effective December 19, 2022). Following these regulations, the FDIC uses an FDIC-supervised institution's affiliated and acquired assets, averaged over the preceding four quarters, to determine whether the FDIC-supervised institution is “small” for the purposes of the RFA.

Generally, the FDIC considers a significant economic impact to be a quantified effect in excess of 5 percent of total annual salaries and benefits or 2.5 percent of total noninterest expenses. The FDIC believes that effects in excess of one or more of these thresholds typically represent significant economic impacts for FDIC-insured institutions.

The FDIC estimates the effects of the required mandates of the proposed rule on small FDIC supervised entities. As noted in Section IV, the FDIC utilizes a pre-statutory baseline under which the GENIUS Act is considered unenacted. Under this baseline, specifically, FDIC-supervised IDIs do not issue payment

As previously discussed, the proposed rule would apply to all FDIC-supervised PPSIs and certain IDIs or FDIC-supervised IDIs that would choose to provide custodial and safekeeping services or hold reserves for payment stablecoins. 64 As of the quarter ending September 30, 2025, the FDIC insures 4,388 depository institutions, of which 3,062 are “small,” and supervises 2,778 IDIs, of which 2,064 are considered “small” for the purposes of RFA. 65

64 See 12 U.S.C. 5903(a)(7).

65 Call Reports, September 30, 2025.

For those “small” IDIs or FDIC-supervised IDIs that choose to provide custodial and safekeeping services or hold reserves for payment stablecoins, the FDIC expects that the direct impact of the proposed rule would be insignificant. Most IDIs perform custodial and safekeeping services under the baseline; the proposed rule would only impose de minimis incremental costs on these IDIs

mber 30, 2025.

For those “small” IDIs or FDIC-supervised IDIs that choose to provide custodial and safekeeping services or hold reserves for payment stablecoins, the FDIC expects that the direct impact of the proposed rule would be insignificant. Most IDIs perform custodial and safekeeping services under the baseline; the proposed rule would only impose de minimis incremental costs on these IDIs.

For those “small” IDIs that would have a PPSI subsidiary the FDIC expects that the direct impact of the proposed rule may be significant. The FDIC recognizes considerable uncertainty regarding the number of FDIC-supervised PPSIs that would emerge under the proposed framework. For the purposes of this analysis, the FDIC estimates that the number of FDIC-supervised PPSIs would likely range between 5 and 30 in the first few years after the enactment of the proposed rule. Given the early stages of the payment stablecoin market, this range accounts for significant uncertainty regarding the volume of future participants. The population of FDIC-supervised PPSIs under the proposed rule could be higher or lower depending on market demand, strategic operational choices of eligible institutions, and future developments in the digital landscape. By utilizing this range, the FDIC aims to establish an estimate that serves as the basis for evaluating the economic effects of the proposed rule, while acknowledging the inherent uncertainty resulting from a lack of historical precedent.

Because an FDIC-supervised PPSI must be a subsidiary of an IDI, the FDIC expects that the initial adopters of this technology will likely be larger institutions with the compliance infrastructure and capital necessary to support payment stablecoin issuance. As such, the FDIC anticipates that most, if not all, FDIC-supervised PPSIs would not be “small” entities as defined by the SBA. Therefore, the FDIC believes the proposed rule is unlikely to have a significant economic impact on a substantial number of small entities

y will likely be larger institutions with the compliance infrastructure and capital necessary to support payment stablecoin issuance. As such, the FDIC anticipates that most, if not all, FDIC-supervised PPSIs would not be “small” entities as defined by the SBA. Therefore, the FDIC believes the proposed rule is unlikely to have a significant economic impact on a substantial number of small entities.

However, given the lack of historical precedent and the evolving nature of the payment stablecoin market, the FDIC conservatively assumes that, for the purpose of this analysis, all the entities falling within the previously discussed scope of 5 to 30 potential FDIC-supervised PPSIs could be “small” entities. By adopting this conservative assumption, the FDIC aims to provide a comprehensive estimate of the potential economic impact on “small” entities.

Even assuming the unlikely scenario that all, i.e., the upper-bound number of 30 entities, would be “small” and that all 30 entities would be significantly impacted by the proposed rule, the number of affected small entities would still make up less than 1.5 percent of all FDIC-supervised small entities. The FDIC does not consider 1.5 percent to be a substantial number of small entities.

In light of the foregoing, the FDIC certifies that the proposed rule would not have a significant economic impact on a substantial number of small entities. Accordingly, an initial regulatory flexibility analysis is not required.

The FDIC invites comments on all aspects of the supporting information provided in this RFA section. The FDIC is particularly interested in comments on any significant effects on small entities that the agency has not identified.

B. Paperwork Reduction Act

This notice of proposed rulemaking has been reviewed for compliance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq. )

require PPSIs to submit a plan to reach additional capital or backstop requirements.

Recordkeeping Requirements

Section 350.4(a)-(c) would require PPSIs to maintain records identifying separate reserves and calculate the fair value of reserve assets.

Section 350.4(j) would require PPSIs to maintain a written contingency plan to restore compliance after reserves fall below the required amount.

Section 350.4(k) would require PPSIs to notify the FDIC if the PPSI determines to take action that would result in the orderly redemptions of all outstanding payment stablecoins.

Section 350.5(a) and (b) would require PPSIs to establish a redemption policy.

Section 350.6(a)(1) and (2) requires PPSIs to maintain internal auditing systems.

Section 350.6(a)(6) would require PPSIs to require its service providers by contract to implement appropriate measures.

Section 350.6(c) would require PPSIs to certify their AML/CFT and sanctions programs.

Section 350.7(j) would require large PPSIs to audit their annual financial statements.

Section 350.103(b) would require PPSIs to maintain written policies, procedures, and internal controls that are adequate to comply with applicable law.

Disclosure Requirements

Section 350.4(g) would require PPSIs to publish a monthly report on its reserve composition on its website monthly.

Section 350.4(h)(1) would require PPSIs to publish a registered public accounting firm's examination report to their website monthly.

Section 350.5(a) and (b) would require PPSIs to publicly disclose a redemption policy.

Section 350.5(d) would require PPSIs to publicly disclose certain information relating to the PPSI, the payment stablecoin, and fees.

Section 350.6(b)(6) would require PPSIs to notify customers if there is an unauthorized access incident.

Section 350.6(b)(6) would require PPSIs to establish a program to notify customers if there is an unauthorized access incident

isclose a redemption policy.

Section 350.5(d) would require PPSIs to publicly disclose certain information relating to the PPSI, the payment stablecoin, and fees.

Section 350.6(b)(6) would require PPSIs to notify customers if there is an unauthorized access incident.

Section 350.6(b)(6) would require PPSIs to establish a program to notify customers if there is an unauthorized access incident. The program shall require the delay of customer notice if an appropriate law enforcement agency determines that notification will interfere with a criminal investigation and provides the permitted payment stablecoin issuer with a written request for the delay.

Section 350.7(j) would require large PPSIs to make their audited financial statements publicly available on the issuer's website.

Table 1—Summary of Estimated Annual Burden (OMB No. 3064-NEW) Information Collection (IC) (obligation to respond) Type of burden (frequency of response) Number of respondents Number of responses per respondent Average time per response (HH:MM) Annual burden (hours) Implementation Burden Reporting Requirements 1. Demonstrate the capability to access and monetize identifiable reserve assets—Section 350.4(d) (Mandatory) Reporting 10 1 4:00 40 2. Require the CEO and CFO to submit to the FDIC a certification of accuracy—Section 350.4(h)(2) (Mandatory) Reporting 10 1 4:00 40 3. Notify the FDIC in writing when identifiable reserves become less than the required amount—Section 350.4(i)(1) (Mandatory) Reporting 10 1 1:00 10 4. Notify the FDIC if the PPSI determines to take action that would result in the orderly redemptions of all outstanding stablecoins—350.4(k) (Mandatory) Reporting 10 1 1:00 10 5. Provide notice to the FDIC when the PPSI is experiencing a significant redemption request—Section 350.5(c)(1) (Mandatory) Reporting 10 1 0:30 5 6. Provide AML/CFT and sanctions program certification to the FDIC—Section 350.6(c) (Mandatory) Reporting 10 1 20:00 200 7

ake action that would result in the orderly redemptions of all outstanding stablecoins—350.4(k) (Mandatory) Reporting 10 1 1:00 10 5. Provide notice to the FDIC when the PPSI is experiencing a significant redemption request—Section 350.5(c)(1) (Mandatory) Reporting 10 1 0:30 5 6. Provide AML/CFT and sanctions program certification to the FDIC—Section 350.6(c) (Mandatory) Reporting 10 1 20:00 200 7. Confidential weekly report to the FDIC—Section 350.7(g) (Mandatory) Reporting 10 1 16:00 160 8. Provide quarterly reports of financial condition—Section 350.7(h) (Mandatory) Reporting 10 1 80:00 800 9. Submit other reports upon request to the FDIC—Section 350.7(i) (Mandatory) Reporting 10 1 16:00 160 10. Audits for large PPSIs, submission to the FDIC—Section 350.7(j) (Mandatory) Reporting *1 *1 4:00 4 11. Notify FDIC if PPSI fails to meet capital or backstop requirements at the end of a quarter—Section 350.9(c)(2) (Mandatory) Reporting 10 1 4:00 40 12. Optional response to the FDIC in writing—Section 350.10(c)(2) (Voluntary) Reporting 10 1 1:00 10 13. Submission of a plan to reach additional capital or backstop requirements—Section 350.10(c)(4) (Mandatory) Reporting 10 1 1:00 10 14. Late filing of Audits—Section 350.7(j)(2)(ii) (Mandatory) Reporting *1 *1 8:00 8 Recordkeeping Requirements 15. Maintain records identifying separate reserves and calculate the fair value of reserve assets—Section 350.4(a)-(c) (Mandatory) Recordkeeping 10 1 40:00 400 16. Written contingency plan to restore compliance after reserves fall below required amount—Section 350.4(j) (Mandatory) Recordkeeping 10 1 8:00 80 17. Establish a redemption policy—Section 350.5(a) and (b) (Mandatory) Recordkeeping 10 1 8:00 80 18. Internal auditing system—Section 350.6(a)(1) and (2) (Mandatory) Recordkeeping 10 1 80:00 800 19. Require service providers by contract to implement appropriate measures—Section 350.6(a)(6) (Mandatory) Recordkeeping 10 1 4:00 40 20

red amount—Section 350.4(j) (Mandatory) Recordkeeping 10 1 8:00 80 17. Establish a redemption policy—Section 350.5(a) and (b) (Mandatory) Recordkeeping 10 1 8:00 80 18. Internal auditing system—Section 350.6(a)(1) and (2) (Mandatory) Recordkeeping 10 1 80:00 800 19. Require service providers by contract to implement appropriate measures—Section 350.6(a)(6) (Mandatory) Recordkeeping 10 1 4:00 40 20. Program to notify customers if there is an unauthorized access incident—Section 350.6(b)(6) (Mandatory) Recordkeeping 10 1 4:00 40 21. Certify AML/CFT and sanctions programs program—Section 350.6(c) (Mandatory) Recordkeeping 10 1 20:00 200 22. Audits for large PPSIs, annual financial statement—Section 350.7(j) (Mandatory) Recordkeeping *1 *1 480:00 480 23. Implement written policies, procedures, and internal controls that are adequate to comply with applicable law—Section 350.103(b) (Mandatory) Recordkeeping 30 1 8:00 240 Third-Party Disclosure Requirements 24. Publish a monthly report on reserve composition monthly—Section 350.4(g) (Mandatory) Third-Party Disclosure 10 1 40:00 400 25. Publish a registered public accounting firm's examination report to website monthly—Section 350.4(h)(1) (Mandatory) Third-Party Disclosure 10 1 8:00 80 26. Publicly disclose a redemption policy—Section 350.5(a) and (b) (Mandatory) Third-Party Disclosure 10 1 1:00 10 27. Publicly disclose certain information relating to the PPSI, the payment stablecoin, and fees—Section 350.5(d) (Mandatory) Third-Party Disclosure 10 1 8:00 80 28. Program to notify customers if there is an unauthorized access incident—Section 350.6(b)(6) (Mandatory) Third-Party Disclosure 10 1 4:00 40 29. Audits for large PPSIs, statements made publicly available—Section 350.7(j) (Mandatory) Third-Party Disclosure *1 *1 8:00 8 Ongoing Burden Reporting Requirements 30. Demonstrate the capability to access and monetize the identifiable reserve assets—Section 350.4(d) (Mandatory) Reporting (On Occasion) 20 1 12:00 240 31

incident—Section 350.6(b)(6) (Mandatory) Third-Party Disclosure 10 1 4:00 40 29. Audits for large PPSIs, statements made publicly available—Section 350.7(j) (Mandatory) Third-Party Disclosure *1 *1 8:00 8 Ongoing Burden Reporting Requirements 30. Demonstrate the capability to access and monetize the identifiable reserve assets—Section 350.4(d) (Mandatory) Reporting (On Occasion) 20 1 12:00 240 31. Require the CEO and CFO to submit to the FDIC a certification of accuracy—Section 350.4(h)(2) (Mandatory) Reporting (Monthly) 20 12 0:15 60 32. Notify the FDIC in writing when identifiable reserves become less than the required amount—Section 350.4(i)(1) (Mandatory) Reporting (On Occasion) *1 *1 4:00 4 33. Notify the FDIC if the PPSI determines to take action that would result in the orderly redemptions of all outstanding stablecoins—350.4(k) (Mandatory) Reporting (On Occasion) *1 *1 4:00 4 34. Provide notice to the FDIC when the PPSI is experiencing a significant redemption request—Section 350.5(c)(1) (Mandatory) Reporting (On Occasion) *1 *1 0:30 1 35. Provide AML/CFT and sanctions programs certification to the FDIC—Section 350.6(c) (Mandatory) Reporting (Annual) 20 2 1:00 40 36. Provide confidential weekly report to the FDIC—Section 350.7(g) (Mandatory) Reporting (Weekly) 20 52 2:00 2,080 37. Provide quarterly reports of financial condition to the FDIC—Section 350.7(h) (Mandatory) Reporting (Quarterly) 20 4 10:00 800 38. Other reports to be submitted upon FDIC request—Section 350.7(i) (Mandatory) Reporting (On Occasion) 20 1 40:00 800 39. Audits for large PPSIs, submission to the FDIC—Section 350.7(j) (Mandatory) Reporting (Annual) *1 1 1:00 1 40. Late filing of Audits—Section 350.7(j)(2)(ii) (Mandatory) Reporting (On Occasion) *1 1 2:00 2 41. Notify FDIC if PPSI fails to meet capital or backstop requirements at the end of a quarter—Section 350.9(c)(2) (Mandatory) Reporting (On Occasion) *1 *1 1:00 1 42

uage

Section 722 of the Gramm-Leach-Bliley Act 68 requires the Federal banking agencies to use plain language in all proposed and final rulemakings published in the Federal Register after January 1, 2000. The FDIC invites your comments on how to make this proposed rule easier to understand, including the following:

68 Public Law 106-102, section 722, 113 Stat. 1338, 1471 (1999), 12 U.S.C. 4809.

Questions on Plain Language

Question 140: Has the FDIC organized the material to suit your needs? If not, how could the proposed rule be more clearly stated?

Question 141: Are the requirements in the proposed rule clearly stated? If not, how could the proposed rule be more clearly stated?

Question 142: Does the proposed rule contain language or jargon that is not clear? If so, which language requires clarification?

Question 143: Would a different format (grouping and order of sections, use of headings, paragraphing) make the proposed rule easier to understand? If so, what changes to the format would make the proposed rule easier to understand?

Question 144: What else could the FDIC do to make the proposed rule easier to understand?

E. Executive Orders 12866 and 14192

Executive Order 12866, as amended, directs agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This proposed rule was drafted and reviewed in accordance with Executive Order 12866. Within OMB, the Office of Information and Regulatory Affairs (OIRA) has determined that this rulemaking is a “significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, the draft rule was submitted to OIRA for review. As noted in other sections of the SUPPLEMENTARY INFORMATION of this document, the FDIC has assessed the costs and benefits of this rulemaking and has made a reasoned determination that the benefits of this rulemaking justify its costs

b), 1816, 1818(a), 1818(b), 1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d

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