šØ CFTC expands payment stablecoin criteria to include national trust banks, aligning with GENIUS Act framework and accelerating federally chartered stablecoin issuance šØ
The Commodity Futures Trading Commission (CFTC) reissued Staff Letter 25-40 on February 7, 2026, expanding the definition of payment stablecoins to recognize national trust banks as eligible issuers of fiat-pegged tokens. The regulator acknowledged it "did not intend to exclude national trust banks" in the original December 2025 letter and updated the guidance to reflect the regulatory climate established by President Trump's July 2025 signing of the GENIUS (Guiding and Establishing National Innovation for US Stablecoins) Act. National trust banksāfinancial institutions authorized to operate in all 50 US states that provide custodial, executor, and asset management services rather than retail bankingācan now issue payment stablecoins under CFTC oversight. The clarification follows the Federal Deposit Insurance Corporation's December 2025 proposal allowing commercial banks to issue stablecoins through FDIC-supervised subsidiaries, requiring 1:1 backing with cash deposits or short-term government securities.
š Key points
š¹ National trust bank inclusion: CFTC amended Staff Letter 25-40 to explicitly include national trust banks as eligible payment stablecoin issuers; these institutions operate in all 50 US states and offer custodial, executor, and asset management services rather than retail banking, making them ideal for stablecoin custody and issuance infrastructure.
š¹ GENIUS Act alignment: The updated guidance reflects the regulatory framework established by the GENIUS (Guiding and Establishing National Innovation for US Stablecoins) Act, signed into law by President Trump in July 2025; the act provides comprehensive regulation for US dollar stablecoins requiring 1:1 backing with fiat currency deposits or short-term government securities.
š¹ FDIC bank-issued stablecoin framework: In December 2025, the FDIC proposed allowing commercial banks to issue stablecoins through subsidiaries subject to FDIC oversight; the framework requires compliance with GENIUS Act redemption policies, sufficient backing collateral, and assessments of the parent bank and subsidiary's financial health.
š¹ Overcollateralization requirement: Under the GENIUS Act, only overcollateralized stablecoins backed 1:1 with fiat currency deposits or short-term government securities like US Treasury Bills are recognized; algorithmic stablecoins and synthetic dollars that rely on software or complex market trading strategies to maintain pegs are excluded from the regulatory framework.
š¹ Charter application wave: The CFTC's clarification arrives amid a surge in national trust charter applicationsāCircle, Paxos, Ripple, and Nomura-backed Laser Digital have all applied or received conditional approval from the Office of the Comptroller of the Currency (OCC), positioning federally chartered banks as the dominant stablecoin issuance model.
š Why it matters
š¹ Federally chartered stablecoins accelerate: By clarifying that national trust banks can issue payment stablecoins, the CFTC removes regulatory ambiguity that had slowed charter applications and institutional adoption; Circle, Paxos, and Ripple can now proceed with confidence that their trust bank models align with both OCC and CFTC expectations.
š¹ Institutional custody advantage: National trust banks specialize in custodial services and asset management rather than deposit-taking, making them structurally suited for stablecoin reserve custody; this model reduces commingling risk, simplifies regulatory oversight, and allows institutions to issue stablecoins without building retail banking infrastructure.
š¹ Consolidation around GENIUS Act compliance: The CFTC and FDIC frameworks converge on GENIUS Act requirementsā1:1 backing, short-term government securities reserves, redemption policiesācreating a unified standard that marginalizes offshore issuers like Tether (USDT) and forces domestic competitors to adopt federal banking charters or exit the US market.
š¹ Algorithmic stablecoins excluded: By explicitly excluding algorithmic and synthetic dollar stablecoins from the regulatory framework, the GENIUS Act and CFTC guidance signal that only fully collateralized, bank-issued tokens will receive federal recognition; this eliminates undercollateralized models like Terra/Luna and DeFi-native protocols from competing in regulated US markets.
šÆ Bottom line: The CFTC's clarification that national trust banks can issue payment stablecoins accelerates the shift toward federally chartered, bank-issued stablecoins as the dominant model for US dollar-pegged tokens. By aligning with GENIUS Act requirementsā1:1 collateralization, government securities reserves, and redemption guaranteesāthe CFTC and FDIC are creating a unified regulatory framework that favors Circle, Paxos, Ripple, and other charter applicants while marginalizing offshore issuers and algorithmic models. National trust banks' specialization in custody and asset management (rather than retail banking) makes them ideal stablecoin issuers, reducing commingling risk and simplifying oversight. If this federally chartered model scales, it will consolidate stablecoin issuance around a handful of regulated institutions and force offshore competitors like Tether to either obtain US banking licenses or accept permanent exclusion from the regulated domestic market.
https://cointelegraph.com/news/cftc-stablecoins-national-trust-banks