The National Credit Union Administration (NCUA) has begun answering a key question for credit unions since the GENIUS Act became law last July: What is the stablecoin licensing process?
On February 11, 2026, the NCUA published a 22-page proposed rule, "Investments in and Licensing of Permitted Payment Stablecoins Issuers," in the Federal Register. This document outlines the framework for credit union participation under the new Act.
The NCUA has a deadline of July 18, 2026, to finalize this rule. Here’s what credit unions need to know now.
Quick background: The GENIUS Act and the NCUA’s role
The GENIUS Act designated the NCUA as a primary federal regulator of stablecoin, alongside the FDIC, the OCC, and the Federal Reserve. Credit unions can't issue stablecoins directly; they must operate through subsidiaries, typically CUSOs, that apply for and obtain an NCUA-issued Permitted Payment Stablecoin Issuer (PPSI) license.
The newly proposed rule covers the application and licensing process. A second rulemaking covering ongoing operational standards, reserves, capital, liquidity, and IT risk management is still forthcoming.
How the licensing process works
The subsidiary applies to only some credit unions
The NCUA recognized that stablecoin issuers in the credit union space will likely be jointly held by multiple credit unions. Rather than requiring every investing credit union to file its own application, the subsidiary files jointly with its "parent company" credit union(s). A parent company is defined as any credit union owning 10% or more of voting securities or having the ability to direct management. This avoids an administrative bottleneck and is consistent with how CUSOs are typically structured.
Everyone gets vetted
Officers and directors across the entire "issuing group", the applying entity, its parent credit unions, and principal shareholders must submit biographical and financial reports. Officers and directors of the applying issuer must also provide fingerprints for background checks. The GENIUS Act bars anyone convicted of felonies involving insider trading, embezzlement, cybercrime, money laundering, terrorism financing, or financial fraud.
You need a real business plan
The NCUA wants financial projections, capital and liquidity plans, a compliant redemption policy, along with evidence that the technology can handle transaction monitoring and regulatory compliance. They'll evaluate the business plan and management team holistically; strengths in one area can offset weaknesses in another.
120 days to get a decision
Once the NCUA receives a substantially complete application, it has 120 days to approve or deny it. If they don't act in time, the application is automatically approved under the GENIUS Act. Within 30 days, the applicant must be notified whether their application is complete or what deficiencies exist.
Credit unions may invest only in NCUA-licensed PPSIs
Under the proposed rule, a credit union can't invest in a stablecoin issuer licensed by the OCC, FDIC, or a state regulator; it must be NCUA-licensed. The board acknowledges that this raises interjurisdictional questions and says they'll coordinate with the other regulators. This will likely generate some debate during the comment period.
Built for collaboration
The NCUA is clearly considering how credit unions operate. They expect multiple credit unions to pool resources and jointly fund stablecoin-issuing subsidiaries. This is understandable, given that the expense for most institutions to establish a compliant stablecoin operation will be considerable.
A key constraint is that federal credit unions can only invest up to 1% of their total paid-in and unimpaired capital and surplus in CUSOs, and PPSI investments are included in this limit. Credit unions already near that ceiling will have limited room to participate.
AML and sanctions
Within 180 days of approval, and annually after that, each NCUA-licensed PPSI must certify that it has anti-money laundering and sanctions compliance programs in place. These programs must be designed to prevent the facilitation of money laundering, particularly for cartels and designated foreign terrorist organizations. Failure to submit this certification is grounds for license revocation.
What's next
In the press release regarding the proposed rule, NCUA Chairman Kyle Hauptman said, it “is the first step in NCUA’s implementation of the GENIUS Act. We’re on track to meet the Congress’ July 18 deadline. Credit unions should be aware that they won’t be at a disadvantage versus other entities, whether in timing or standards.”
The comment period on the proposed rule will run through April 13, 2026. For credit unions evaluating this space, it is worth engaging with as the framework being built now will define how the industry participates for years to come.
The NCUA is seeking input on the 10% parent company threshold, whether to charge fees, how to handle widely held subsidiaries, and what should be included in the forthcoming Payment Stablecoin Issuer Manual. Comments can be submitted at regulations.gov under docket NCUA-2025-1335.
In the meantime, the NCUA's work is ongoing. The administration still needs to propose operational standards, reserves, capital, and IT risk management, and is updating examination policies to accommodate its new supervisory role over FICU subsidiaries.
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