The United States National Credit Union Administration (NCUA) has proposed its first rules under the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, sketching out how subsidiaries of federally insured credit unions could apply to become federally supervised payment stablecoin issuers.
The NCUA, which oversees more than 4,000 federally insured credit unions serving roughly 144 million members and about $2.38 trillion in assets as of mid-2025, is using this proposal to set out the process and standards for licensing such issuers.
Under the proposal, any payment stablecoin issuer that is a “subsidiary of an insured credit union” would need to obtain an NCUA permitted payment stablecoin issuer (PPSI) license before issuing coins.
Federally insured credit unions would also be prohibited from investing in, or lending to, payment stablecoin issuers unless those issuers hold an NCUA PPSI license.
The draft is narrowly focused on licensing and investment limits. A forthcoming proposal will implement GENIUS Act standards and restrictions for PPSIs, including requirements related to reserves, capital, liquidity, illicit finance, and information technology risk management.
For now, the rulemaking is about defining the licensing and oversight architecture, and any eventual rollout of stablecoin services to members would depend on future approvals and additional standards.
“A forthcoming proposal will propose regulations to implement the standards and restrictions imposed by the GENIUS Act on PPSIs,” the preamble states.
Related: The GENIUS Act and MiCA will split stablecoins into cash and shadow deposits
Public chain neutral and 120‑day clock
Two features stand out for the broader crypto market. First, the NCUA would be barred from denying a substantially complete application solely because a stablecoin is issued “on an open, public, or decentralized network,” language that explicitly prevents public blockchain issuance from being rejected on that basis alone.
Second, once an application is deemed “substantially complete,” the agency would have 120 days to approve or deny it, and if the NCUA fails to act within that window, the application would be “deemed approved” by default.
The proposal also implements a core GENIUS Act design choice. Insured depository institutions, including credit unions, cannot issue payment stablecoins directly and must instead use separately supervised subsidiaries that meet uniform federal standards.
For credit unions, that generally means routing activity through credit union service organizations and other qualifying entities that fall under NCUA’s jurisdiction as “subsidiaries of an insured credit union.”
The document is only a notice of proposed rulemaking. Stakeholders have 60 days from Federal Register publication to comment before the NCUA can finalize or revise the licensing regime.
Cointelegraph reached out to NCUA for additional comments, but had not received a response by publication.
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