The Commodity Futures Trading Commission (CFTC) has broadened the universe of entities eligible to issue payment stablecoins, expanding the scope beyond traditional banks to include national trust banks. In a reissued staff communication, the agency clarified that national trust banks — institutions that typically provide custodial services, act as executors, and manage assets on behalf of clients rather than engaging in retail lending — can issue fiat-pegged tokens under its framework. The update, formally an amended Letter 25-40 dated December 8, 2025, signals a regulatory opening for non-retail institutions to participate in the stablecoin issuance landscape while staying within the agency’s risk controls and disclosure requirements. This move sits within a broader push to bring more clarity and supervision to U.S. dollar stablecoins as lawmakers push for a comprehensive framework.
The CFTC’s updated stance came alongside a wider regulatory environment shaped by the GENIUS Act, a flagship effort signed into law in July 2025 to establish a comprehensive regime for dollar-backed stablecoins. In parallel, the Federal Deposit Insurance Corporation (FDIC) has put forward a proposal that would allow commercial banks to issue stablecoins through a subsidiary, subject to FDIC oversight and alignment with GENIUS Act requirements. Taken together, the developments reflect a concerted push by U.S. regulators to delineate who can issue stablecoins, how reserves are managed, and what governance standards apply to ensure stability and consumer protection.
“The [Market Participants] Division did not intend to exclude national trust banks as issuers of payment stablecoins for purposes of Letter 25-40. Therefore, the division is reissuing the content of Letter 25-40, with an expanded definition of payment stablecoin.”
The evolution of guidance and policy in this space underscores the Biden-era regulatory stance on digital assets, even as political dynamics shift. A key inflection point cited by supporters and critics alike is the GENIUS Act, which aims to codify how dollar-pegged tokens are issued, backed, and redeemed in the U.S. financial system. The act envisions a framework in which stablecoins are tethered to high-quality assets—principally fiat currency deposits or short-term government securities—and prioritizes robust reserve backing over more speculative, algorithmic approaches. The law’s emphasis on 1:1 backing is central to the U.S. regulatory thesis that stablecoins should function as trusted payment rails rather than speculative instruments.
The interest in national trust banks as issuers reflects a broader attempt to harness existing financial infrastructure for stablecoin issuance while ensuring strong oversight. Custodial banks and asset managers are well-positioned to manage reserve assets and redemption mechanics, provided they meet the GENIUS Act’s criteria and the CFTC’s risk-management expectations. Yet the legal architecture remains complex: the GENIUS Act excludes algorithmic and synthetic-stablecoin models from its defined regulatory regime, signaling a deliberate preference for on-chain dollars that are backed by explicit, liquid reserves. This delineation matters for developers, exchanges, and institutions weighing whether to launch or scale stablecoin products within the U.S. market.
From a policy perspective, the FDIC’s December 2025 framework signals a parallel track for banks that want to participate in the stablecoin economy. The FDIC proposal contemplates a governance and oversight regime where a parent bank may issue stablecoins through a subsidiary, with the parent and subsidiary jointly evaluated for GENIUS Act compliance. In practical terms, banks would need clear redemption policies, transparent reserve management, and robust risk controls to withstand liquidity stress scenarios. The proposal’s emphasis on cash deposits and allocations in short-term government securities as backing underlines a risk-conscious approach to reserve management, designed to protect consumers and maintain trust in the stability mechanism.
Taken together, the CFTC, GENIUS Act, and FDIC proposals illustrate a coordinated effort to formalize who can issue stablecoins and under what safeguards. While this regulatory contour aims to reduce systemic risk and increase transparency, it also raises questions about competition, innovation, and the pace at which institutions adapt to new requirements. For market participants, the implications are twofold: potential increases in the number of credible issuers and more stringent standards for reserves and governance. The exact shape of implementation will hinge on subsequent rulemaking, agency guidance, and how firms align their compliance programs with the evolving framework.
Why it matters
First, the expansion to national trust banks widens the potential issuer base for U.S. dollar stablecoins, potentially increasing liquidity and providing new on-ramps for institutions that already manage large asset pools and custodial services. By enabling custody-focused banks to issue stablecoins, regulators acknowledge that core trust and settlement functions can be integrated with digital tokens in a controlled, audited environment. This could accelerate the adoption of digital-dollar payments for settlement, payroll, and cross-border transactions, provided these tokens remain backed by transparent reserves and subject to robust supervisory oversight.
Second, the GENIUS Act’s emphasis on 1:1 backing and the exclusion of algorithmic models create a delineated path for stablecoins to be treated as genuine state-of-the-art payment instruments rather than speculative vehicles. The act’s framework aims to minimize counterparty risk and maintain trust among users, merchants, and financial institutions. For issuers, this means that any new product entering the U.S. market will need to demonstrate verifiable reserves and clear redemption policies, which could influence how liquidity is sourced, how collateral is allocated, and how risk is modeled. Investors and traders will scrutinize reserve disclosures and governance structures more closely, knowing that regulatory compliance is a central prerequisite for broader market access.
Third, the FDIC’s proposed model for bank-issued stablecoins introduces a layered supervisory process that ties parent institutions to a dedicated subsidiary. While this structure could isolate risk and enhance accountability, it also adds a layer of administrative complexity for banks seeking to participate in the stablecoin economy. For the broader crypto ecosystem, the development signals a maturing regulatory environment in which stablecoins can function as reliable payment rails if they meet explicit, enforceable standards. This clarity could encourage more mainstream financial players to engage with digital currencies, provided the business models remain aligned with prudential risk controls.
What to watch next
- December 8, 2025 — CFTC confirms amended Letter 25-40 and expands the scope to national trust banks.
- FDIC December 2025 proposal — Banks may issue stablecoins through a subsidiary under FDIC oversight; track the Federal Register notice and subsequent rulemaking.
- GENIUS Act implementation timeline — Monitor any updates on how the regime will be phased in and how enforcement expectations will be communicated.
- Regulatory alignment — Any further CFTC or FDIC guidance clarifying reserve composition, redemption windows, and reporting obligations for issuers.
Sources & verification
- CFTC press release 9180-26 announcing the amended Letter 25-40 and inclusion of national trust banks as potential issuers of payment stablecoins.
- Federal Register notice or FDIC filing outlining the proposed framework for banks issuing stablecoins via a subsidiary and GENIUS Act alignment.
- Donald Trump stablecoin law signed in July 2025 — coverage detailing GENIUS Act context and regulatory aims.
- GENIUS Act overview — cointelegraph Learn article explaining how the act could reshape U.S. stablecoin regulation.
Regulatory expansion widens who can issue payment stablecoins
The CFTC’s decision to explicitly include national trust banks as potential issuers of payment stablecoins marks a notable shift in the agency’s interpretive posture. By reissuing Letter 25-40 with an expanded definition of “payment stablecoin,” the commission provides a clearer pathway for custodial institutions to participate in the stablecoin economy without stepping outside the boundaries of current risk management expectations. The language adopted by the Market Participants Division signals a deliberate attempt to harmonize regulatory definitions with evolving market realisms, where large custody providers and asset managers already perform core settlement and custody functions that could be extended to tokenized dollars.
At the core of the GENIUS Act is a drive to formalize stablecoins as trusted payment instruments. The act aims to curb regulatory ambiguity by outlining precise reserve requirements and governance standards, ensuring that dollars backing stablecoins are protected by transparent, high-quality assets. The law’s emphasis on 1:1 backing—whether through fiat deposits or highly liquid government securities—reflects a preference for stability over novelty. By excluding algorithmic or synthetic stablecoins from the GENIUS framework, policymakers intend to minimize complexity and counterparty risk, reducing the likelihood of sudden depegging or reserve shocks.
The FDIC’s forthcoming framework—allowing banks to issue stablecoins through a subsidiary under its oversight—complements the CFTC’s redefinition. It signals a practical progression toward integrating traditional banking structures with digital-asset processes, provided banks meet the GENIUS Act’s criteria. The proposed safeguards emphasize redemption policies, reserve adequacy, and ongoing financial health assessments, underscoring the regulators’ focus on resilience and public trust. In broad terms, the convergence of these initiatives points to a gradual, monitored expansion of the stablecoin ecosystem rather than a rapid, unbounded growth of new issuers.
Market participants should watch not only the formal issuers that emerge but also the evolving standards for disclosures, stress testing, and governance. As more entities participate in this space, the demand for clear, consistent regulatory expectations will intensify, prompting issuers to adopt rigorous compliance programs and robust risk controls. The balance regulators seek is clear: widen access to stablecoins as practical payment tools while maintaining sufficient guardrails to protect consumers, financial stability, and the integrity of settlement systems.
