On February 11, the National Credit Union Administration (NCUA) released a proposed rule to implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the GENIUS Act) for federally insured credit unions (FICUs). Under the proposal, credit unions cannot issue payment stablecoins directly. Instead, only NCUA‑licensed “permitted payment stablecoin issuers” (PPSIs) that are subsidiaries of FICUs would be allowed to issue payment stablecoins, and FICUs would be limited to investing only in PPSIs licensed by the NCUA.

The rule sets out who can apply, how the joint FICU–subsidiary application process will work, how the NCUA will evaluate applications, and what ongoing obligations licensed issuers will face. Comments are due by April 13, 2026.

Key Points

  • GENIUS Act framework and NCUA’s role
    • The GENIUS Act creates a federal framework for “payment stablecoins” with both federal and state supervisory options.
    • Insured depository institutions (including FICUs) may not issue payment stablecoins directly. Issuance must occur through subsidiaries.
    • The NCUA is the “primary Federal payment stablecoin regulator” for PPSIs that are subsidiaries of FICUs and must issue implementing regulations by July 18, 2026.
  • Who can be an NCUA‑licensed PPSI
    • Only “Subsidiaries of an Insured Credit Union” can be licensed by the NCUA. This includes:
      • Organizations providing routine operational services to a credit union;
      • Credit union service organizations (CUSOs); and
      • Subsidiaries of state‑chartered insured credit unions, plus all downstream tiers.
    • In practice, FICU subsidiaries issuing stablecoins will generally be CUSOs, and PPSI activities will be tightly confined to issuing, redeeming, and managing reserves and closely related services.
  • Joint application model and “Parent Company” concept
    • The “Applying Issuer” (the prospective PPSI) must apply jointly with its FICU Parent Company(ies).
    • A “Parent Company” is any insured credit union that:
      • Owns, controls, or can vote 10% or more of any class of voting securities of the PPSI; or
      • Otherwise can direct the PPSI’s management or policies.
    • If no FICU holds at least 10%, the FICU with the largest voting interest becomes the Parent Company, even if its stake is below 10%.
  • Principal Shareholders and non‑credit union investors
    • “Principal Shareholder” covers any non‑FICU person (or group) that will own or control 10% or more of any voting class.
    • NCUA will review the competence, experience, and integrity of the Officers and Directors of Principal Shareholders as part of the licensing process.
    • The agency is seeking comment on whether the 10% threshold is appropriate (versus, for example, 25%) and whether non‑FICU investment in PPSIs should be capped or restricted.
  • NCUA’s evaluation criteria and business plan expectations
    • By statute, NCUA must evaluate:
      • The applicant’s financial condition and ability to meet GENIUS Act reserve, capital, liquidity, and operational standards;
      • Criminal background (certain felonies are disqualifying for Officers/Directors);
      • Competence, experience, integrity, and compliance history of the Issuing Group (issuer, Parent Companies, Principal Shareholders, and their Officers/Directors); and
      • The adequacy of the PPSI’s redemption policy and overall safety and soundness.
    • Applicants must submit a detailed business plan, including:
      • Financial projections and capital and liquidity plans;
      • Management, governance, and risk‑management structure;
      • Reserve, liquidity, and asset‑diversification approach; and
      • Demonstration of understanding of legal and regulatory requirements, including technology and operational readiness.
    • NCUA will publish a Payment Stablecoin Issuer Manual with more granular expectations, templates, and “model business plan” guidance and is specifically asking what should be included in that Manual.
  • Decision timing and “substantially complete” standard
    • NCUA must determine within 30 days of receipt whether an application is “substantially complete” and identify any missing information.
    • Once an application is substantially complete, NCUA has 120 days to approve or deny. Failure to act within 120 days is deemed approval by statute.
    • An application remains substantially complete unless a “material change in circumstances” requires it to be treated as a new application.
  • Denials, hearings, and reapplications
    • NCUA may deny a substantially complete application only if the PPSI’s activities would be “unsafe or unsound” under the statutory factors.
    • Use of an open, public, or decentralized network cannot be the sole basis for denial.
    • If denied, NCUA must issue, within 30 days, a written decision with specific findings and actionable recommendations to address deficiencies.
    • Applicants have 30 days to request a written or oral hearing before the NCUA Board. A final determination must follow within 60 days of the hearing.
    • Denial does not preclude filing a subsequent application.
  • Change‑in‑control and ongoing governance oversight
    • A FICU that proposes to acquire a stake that would make it a Parent Company of an NCUA‑licensed PPSI must give NCUA 60 days’ prior written notice.
    • NCUA may disapprove the change if the FICU’s leadership does not meet competence, experience, or integrity expectations. The FICU may appeal and request a hearing.
  • Anti‑money laundering (AML) and sanctions certification
    • Within 180 days after approval, and annually thereafter, each PPSI must certify to NCUA that it has implemented AML and economic‑sanctions compliance programs reasonably designed to prevent money laundering (particularly for cartels and designated foreign terrorist organizations) and terrorist financing.
    • Failure to certify is grounds for revocation of the PPSI license. Knowingly false certifications carry potential criminal liability under 18 U.S.C. § 1001 and may be referred to DOJ or state authorities.
  • Costs, fees, and program funding
    • NCUA may in the future impose licensing or examination fees specific to PPSIs. Any fee schedule would be published on NCUA’s website.
    • The Board is seeking comment on whether program costs for PPSI licensing and supervision should be borne only by participating FICUs/PPSIs (via fees) or shared across the industry through existing NCUA budgeting mechanisms.
  • Comment period and participation opportunities
    • The proposal is open for comment until April 13, 2026.
    • NCUA poses numerous targeted questions on thresholds, structure, non‑FICU ownership limits, manual content, AML expectations, change‑in‑control procedures, and fee design.

Our Take

The proposal is a foundational step in defining how credit unions can participate in the emerging payment stablecoin ecosystem under a federally supervised model. The extensive list of specific requests for comment suggests NCUA is open to refining its approach — especially on Parent Company and Principal Shareholder thresholds, non‑FICU ownership limits, change‑in‑control mechanics, and fee structures. FICUs, CUSOs, and prospective stablecoin issuers should consider engaging in the rulemaking process now, while the framework is still being built.