- NCUA introduces new licensing rules for credit unions to issue stablecoins.
- Public blockchain issuers now eligible for stablecoin licensing under NCUA.
- Credit unions can soon launch stablecoins with NCUA’s new proposal.
The National Credit Union Administration (NCUA) has revealed its first-ever set of rules under the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, paving the way for federally insured credit unions to launch their own stablecoins. This bold move offers new opportunities for over 4,000 credit unions, which together hold $2.38 trillion in assets, to explore innovative payment systems within a regulated framework.
Under the new proposal, subsidiaries of federally insured credit unions must obtain an NCUA permitted payment stablecoin issuer (PPSI) license before issuing any stablecoins. This ensures that only entities meeting strict federal standards can operate in the stablecoin space, bringing enhanced legitimacy to the market. Additionally, federally insured credit unions will be prohibited from investing in or lending to payment stablecoin issuers unless they are licensed under the new PPSI framework.
The proposed rule primarily focuses on defining the licensing procedure and investment limits, setting a clear path for stablecoin issuers within the credit union sector. It also includes a commitment to address further GENIUS Act standards in a future proposal, which will cover critical areas like capital reserves, liquidity, illicit finance concerns, and risk management in information technology.
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Key Highlights of the New NCUA Proposal
A standout feature of the NCUA’s proposal is its public blockchain neutrality. The agency has made it clear that stablecoins issued on decentralized or open networks will not be rejected solely on that basis. This marks a significant shift in how stablecoin issuers can operate, embracing more diverse and decentralized networks in the process.
Moreover, the proposal introduces a strict 120-day timeline for the NCUA to approve or deny applications once deemed “substantially complete.” If the agency fails to act within that period, the application will be automatically approved, speeding up the licensing process and preventing unnecessary delays.
The proposal also reinforces a key provision of the GENIUS Act: credit unions cannot directly issue payment stablecoins. Instead, they must work through subsidiaries that adhere to federal regulations, such as credit union service organizations. This structure is designed to ensure stablecoin issuers are supervised under the NCUA’s jurisdiction, maintaining robust oversight.
As the rulemaking process continues, stakeholders have 60 days to provide feedback on the proposal before it can be finalized. With this new move, the NCUA is setting the stage for an entirely new landscape in digital payment solutions, potentially transforming how credit unions engage with the world of stablecoins.
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