On February 12, the NCUA proposed new regulations to implement the licensing and oversight requirements for payment stablecoin issuers that are subsidiaries of federally insured credit unions, as mandated by the GENIUS Act (covered by InfoBytes here). The NPRM, among other things, outlined a process requiring these issuers to apply for licensure jointly with their parent credit unions (as defined), established standards for evaluating applications — including financial condition, management integrity, and compliance with the BSA/AML — and set a 120-day deadline for agency decisions.

Under the proposed rule, credit unions would be limited to investing only in NCUA-licensed stablecoin issuers and would be required to certify anti-money laundering and sanctions compliance annually. The GENIUS Act prohibits insured depository institutions from directly issuing payment stablecoins, instead requiring issuance through regulated subsidiaries. Additionally, the proposal clarified definitions, application procedures, and reporting requirements and requested public comment on thresholds for ownership, fee structures, operational standards, potential regulatory overlaps with the FDIC, the OCC, and the Fed, business plan requirements, and the scope of permissible activities for stablecoin issuers. Comments on the proposed rule must be submitted by April 13.