The United States National Credit Union Administration (NCUA) has unveiled its first proposed rule under the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, outlining a federal licensing pathway for payment stablecoin issuers operating through credit union subsidiaries.
The proposal marks a significant step in shaping how stablecoins could be integrated into the US credit union system. The NCUA oversees more than 4,000 federally insured credit unions, representing approximately 144 million members and $2.38 trillion in assets as of mid-2025. With this move, the agency is setting the groundwork for how stablecoin-related services may eventually be offered within this sector.
NCUA Introduces PPSI License for Stablecoin Issuers
Under the proposed rule, any payment stablecoin issuer that operates as a “subsidiary of an insured credit union” must obtain a new license known as a Permitted Payment Stablecoin Issuer (PPSI) license from the NCUA before issuing stablecoins.
The proposal also places restrictions on federally insured credit unions. They would be prohibited from investing in or lending to payment stablecoin issuers unless those issuers hold an NCUA PPSI license. This ensures that only federally supervised and approved entities can access credit union capital or partnerships.
Importantly, the current proposal focuses strictly on the licensing framework and related investment limitations. The NCUA has stated that a separate, forthcoming rulemaking will address the operational standards required under the GENIUS Act. These future regulations are expected to cover critical areas such as reserve requirements, capital and liquidity standards, anti–money laundering compliance, illicit finance safeguards, and information technology risk management.
For now, the agency is building the regulatory structure that would govern how credit union-affiliated stablecoin issuers are authorized and supervised.
Public Blockchain Protection and 120-Day Approval Window
Two provisions in the proposal stand out for the broader crypto industry.
First, the NCUA would be prohibited from denying a substantially complete application solely because the stablecoin is issued on an open, public, or decentralized blockchain network. This language explicitly prevents regulators from rejecting applications simply due to the use of public blockchain infrastructure, signaling a technology-neutral stance.
Second, the proposal introduces a clear 120-day review timeline. Once an application is deemed “substantially complete,” the NCUA would have 120 days to approve or deny it. If the agency fails to act within that period, the application would be automatically “deemed approved.” This default approval mechanism provides greater regulatory certainty for applicants.
The rule also reinforces a key principle of the GENIUS Act: insured depository institutions, including credit unions, cannot directly issue payment stablecoins. Instead, they must conduct such activities through separately supervised subsidiaries that meet uniform federal standards. In the credit union context, this typically means operating through credit union service organizations or other qualifying entities under NCUA jurisdiction.
It is important to note that the document is only a notice of proposed rulemaking. Stakeholders will have 60 days from publication in the Federal Register to submit comments. After reviewing feedback, the NCUA may revise, finalize, or expand the proposed licensing regime.
