GENIUS Act Implementation Phase Begins, Setting Federal Standards for Stablecoin Issuers
Federal regulators initiate rulemaking process for payment stablecoin framework as statutory deadlines approach
February 16, 2026 – The implementation of the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) has formally commenced, with federal agencies publishing proposed rules and seeking public comment on the regulatory framework for payment stablecoin issuers.
The legislation, enacted on July 18, 2025, establishes a comprehensive federal regulatory regime for payment stablecoins and limits their issuance in the United States to “permitted payment stablecoin issuers” (PPSIs). The statute provides three regulatory pathways for entities seeking to become PPSIs: through insured depository institution subsidiaries, via the Office of the Comptroller of the Currency for nonbank entities, or through state regulators for entities established under state law.
On December 16, 2025, the FDIC issued a notice of proposed rulemaking to implement Section 5 of the GENIUS Act, establishing application procedures for state nonmember banks and state savings associations seeking to issue payment stablecoins through subsidiaries. The proposal outlines a 120-day review period for substantially complete applications and limits denial authority to determinations that activities would be “unsafe or unsound” based on five statutory factors.
The FDIC extended the public comment period for this proposal from February 17, 2026 to May 18, 2026, citing the need for additional time to address matters raised by the rulemaking.
The Treasury Department issued an advance notice of proposed rulemaking in September 2025, seeking comment on regulations regarding illicit finance prevention, comparable foreign regulatory regimes, and restrictions on non-financial companies issuing stablecoins. Treasury Secretary Scott Bessent confirmed in February 2026 congressional testimony that the department is moving forward with GENIUS Act implementation “with deliberate speed.”
Additional rulemakings are required from primary federal payment stablecoin regulators—including the Federal Reserve, FDIC, NCUA, and OCC—addressing capital, liquidity, and risk management standards, with most final regulations due by July 18, 2026.
The statute will become effective on the earlier of January 18, 2027, or 120 days after final implementing regulations are approved.
Why this matters: The GENIUS Act implementation phase transitions stablecoin regulation from legislative framework to operational reality, establishing clear compliance requirements for issuers and defining the boundaries of permissible activity. From a market structure perspective, the rulemaking process determines the specific information, capital commitments, and operational controls required for regulatory approval, directly affecting which entities can enter the market and under what conditions. The statutory prohibition on paying interest solely in connection with holding stablecoins creates a structural distinction between stablecoins and interest-bearing deposits, shaping competitive dynamics between crypto platforms and traditional financial institutions.
Source: Nasdaq