NCUA Proposes Licensing Framework for Credit Union Stablecoin Issuers

The National Credit Union Administration ("NCUA") proposed regulations to implement GENIUS Act provisions that would establish a licensing framework for payment stablecoin issuers affiliated with federally insured credit unions.

The proposal would create a new Part 706 of the NCUA's regulations, mandating that federally insured credit unions ("FICUs") cannot issue payment stablecoins directly. Instead, FICUs must utilize a subsidiary structure—such as a Credit Union Service Organization—to operate as a Permitted Payment Stablecoin Issuer ("PPSI"). In the proposed rule, NCUA focused on the application process and investment limitations, noting that specific operational standards for reserves and liquidity would be addressed in a forthcoming proposal.

Under the proposal:

• Joint Application Required: A FICU subsidiary seeking to issue stablecoins must file a license application jointly with its "Parent Company," which is defined as any FICU owning 10% or more of the subsidiary’s voting securities;
• Investment Restrictions: FICUs are restricted to investing only in PPSIs that hold an NCUA license, effectively prohibiting FICUs from investing in stablecoin issuers licensed by state regulators or other federal agencies;
• Vetting and background checks: The application process requires "Biographical and Financial Reports" and biometric-based criminal history searches for all officers, directors, and principal shareholders of the applying issuer and its parent company to screen for felonies involving financial crimes; and
• 120-Day Decision Timeline: The NCUA must render a decision within 120 days of receiving a substantially complete application, after which the application is deemed approved if no decision is made.

The NCUA stated that the requirement for joint applications is intended to ensure that both the subsidiary and its material investors understand their responsibilities and risks. The agency said that this approach balances the statutory mandate of the GENIUS Act with the unique cooperative model of the credit union industry.

Comments on the proposed rule must be received by April 13, 2026.