Banks can now issue stablecoins directly — and deposit insurance covers the reserves

The US banking regulator just clarified that banks can issue payment stablecoins and that the cash reserves backing them count as insured deposits. This means a bank can now offer a stablecoin product without creating a separate legal entity or losing deposit insurance protection on the reserves.

For years, the legal status of stablecoins was murky — banks couldn't tell if issuing one would trigger new capital rules, lose them deposit insurance, or create liability they couldn't price. This rule removes that uncertainty by treating stablecoin reserves as ordinary deposits. What changes: banks can now build stablecoin products into their existing business without restructuring. What becomes possible: a bank can offer a dollar-backed digital token to customers while keeping the backing cash on its own balance sheet, insured and regulated like any other deposit account. The GENIUS Act itself was passed in 2023, but this is the first time the regulator has spelled out what it actually means for a bank's operations.