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On February 12, the National Credit Union Administration issued a notice of proposed rulemaking to implement the licensing framework required by the GENIUS Act. The proposal would establish a formal application, review, and supervisory structure for payment stablecoin issuers that operate as subsidiaries of federally insured credit unions.
According to the NCUA, the rule is intended to operationalize the GENIUS Act's requirement that insured depository institutions, including credit unions, may not directly issue payment stablecoins and instead must do so through a licensed subsidiary overseen by the appropriate primary federal payment stablecoin regulator. For credit union subsidiaries, that regulator would be the NCUA.
The proposal outlines a structured licensing regime, including the following key components:
- Joint application requirement for qualifying parent credit unions. A subsidiary seeking to issue payment stablecoins would be required to apply jointly with any "Parent Company" credit union that owns or controls at least 10 percent of voting securities or otherwise has the ability to direct management or policies.
- Defined statutory evaluation standards. The NCUA would assess financial condition and resources, capital and liquidity planning, management competence and integrity, the absence of specified felony convictions, and whether the applicant's redemption policy satisfies statutory standards under the GENIUS Act.
- Firm procedural timelines for agency action. The agency must determine within 30 days whether an application is substantially complete and must render a decision within 120 days of receiving a substantially complete application. Failure to act within that period would result in deemed approval.
- Ongoing anti-money laundering certification requirements. Licensed issuers would be required to certify within 180 days of approval, and annually thereafter, that they maintain anti-money laundering and economic sanctions compliance programs reasonably designed to prevent illicit finance.
Putting It Into Practice: The proposal represents the first concrete federal licensing pathway for credit union-affiliated stablecoin issuance under the GENIUS Act (previously discussed here). Credit unions exploring digital asset strategies should evaluate subsidiary structures, ownership thresholds, governance frameworks, capital planning, and compliance infrastructure in light of the proposed application standards. As parallel rulemakings advance at other federal banking regulators, institutions should monitor for consistency in supervisory expectations and prepare for a formal, application-driven approval regime.
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