The US National Credit Union Administration (NCUA) has announced a plan to establish a federal licensing system for payment stablecoin issuers that operate via subsidiaries of credit unions. This is a notable development towards the regulation of stablecoins in the US.
The NCUA’s proposal aligns with the goals of the Guiding and Establishing National Innovation for Stablecoins (GENIUS) Act, which seeks to establish a regulatory framework for stablecoin issuers.
Licensing Requirements and Process
According to the proposed regulation, any payment stablecoin issuer that is a subsidiary of an insured credit union should first obtain an NCUA permitted payment stablecoin issuer (PPSI) license if they plan to issue coins.
Federally insured credit unions would be restricted from investing in, or lending to, payment stablecoin issuers unless those issuers hold a NCUA PPSI license. The NCUA would have 120 days to either approve or deny an application, and in case the agency fails to take any action within that period, the application would be considered approved by default.
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Key Features and Implications
The proposal adopts a fundamental provision of the GENIUS Act that mandates insured depository institutions, such as credit unions, to issue payment stablecoins via their separately supervised subsidiaries, which comply with uniform federal standards.
The NCUA would not be allowed to reject a substantially complete stablecoin application simply due the stablecoin is issued on an open, public, or decentralised network.
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Regulatory Landscape
The GENIUS Act represents landmark legislation that sets up a thorough federal framework for the issuance of payment stablecoins. The NCUA’s proposal plays a vital role in the implementation of this framework.
After the NCUA publishes the proposal in the Federal Register, stakeholders will have 60 days to submit their comments before the NCUA can either finalise or revise the licensing regime.
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