The United States National Credit Union Administration (NCUA) has unveiled its first proposed rules under the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, creating a formal pathway for subsidiaries of federally insured credit unions to become licensed payment stablecoin issuers.
The NCUA, which supervises more than 4,000 federally insured credit unions holding roughly $2.38 trillion in assets and serving about 144 million members as of mid-2025, published the notice of proposed rulemaking. The core of the proposal establishes the NCUA permitted payment stablecoin issuer (PPSI) license. Any payment stablecoin issuer that is a "subsidiary of an insured credit union" must obtain this 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 a PPSI license.
Two critical features of the proposal 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." This technology-neutral language explicitly prevents rejection based purely on the use of a public blockchain. Second, the agency would have a 120-day clock to approve or deny a complete application. If the NCUA fails to act within that window, the application would be "deemed approved" by default.
The proposal implements a key GENIUS Act design choice: insured depository institutions, including credit unions, cannot issue payment stablecoins directly. They must instead use separately supervised subsidiaries that meet uniform federal standards. For credit unions, this typically means routing activity through credit union service organizations (CUSOs) or other qualifying entities classified as "subsidiaries of an insured credit union."
The current draft is narrowly focused on licensing and investment limits. A forthcoming proposal will implement the GENIUS Act's standards and restrictions for PPSIs, covering requirements for reserves, capital, liquidity, illicit finance, and information technology risk management. The document is now in a public comment phase, with stakeholders having 60 days from Federal Register publication to submit feedback before the NCUA can finalize or revise the licensing regime.
