Banking and Finance Law Daily Wrap Up, FINANCIAL TECHNOLOGY—Credit Union trade urges flexible NCUA approach for stablecoin issuers, (Apr 16, 2026)

By Shashi Kant, BALLB, LLM

The comment letter from America’s Credit Unions seeks greater latitude for consortium structures, PPSI subsidiaries, and custodial activity under proposed GENIUS Act framework.

America’s Credit Unions urged the National Credit Union Administration (NCUA) to take a more flexible approach in implementing its first proposed rule under the GENIUS Act, arguing that the agency should tailor the framework to reflect how credit unions are most likely to participate in stablecoin markets and avoid requirements that could disadvantage smaller institutions. In a comment letter and related statement, the group said the proposal should better accommodate joint and consortium-based models for permitted payment stablecoin issuers and provide clearer treatment of investments, custodial activities, and mixed-ownership structures. The NCUA’s February notice of proposed rulemaking would establish the process for approval and licensure of permitted payment stablecoin issuers subject to the agency’s jurisdiction. Under the proposal, federally insured credit unions would be limited to investing in NCUA-licensed PPSIs, and applicants would have to apply jointly with an investing federally insured credit union parent company. The agency said at the time that the proposal implemented the statutorily required licensing framework and that a later rulemaking would address the standards and restrictions imposed by the GENIUS Act on Permitted Payment Stablecoin Issuers (PPSIs) (see Banking and Finance Law Daily, Feb. 12, 2026).

Flexibility sought. In its comment letter, America’s Credit Unions said it supports the proposal’s general clarification around joint applications for licensed NCUA PPSIs but argued that the agency should recognize that near-term credit union issuing activity is more likely to occur through industry consortia backing larger PPSIs rather than through individual credit unions launching stand-alone branded stablecoins. The group said the final rule should therefore preserve flexibility for consortium participation and avoid discretionary criteria that could favor larger institutions. The letter specifically urged NCUA to allow federal credit unions to invest in PPSI subsidiaries that are distinct from credit union service organizations. According to the filing, the agency should consider modifying or waiving certain Credit Union Service Organization (CUSO) requirements that may be ill-suited to stablecoin activities. America’s Credit Unions also asked NCUA to clarify that PPSI reserves pledged by owner credit unions would not count against the 1 percent cap applicable to CUSO investments.

Guidance needed. America’s Credit Unions also asked NCUA to address how it expects credit unions to be treated when they engage in custodial activities without planning to issue a permitted payment stablecoin. The group further requested additional guidance on mixed-ownership PPSIs, the role of corporate credit unions, and coordination with other federal regulators. In the organization’s view, such clarifications are needed if credit unions are to participate effectively in the stablecoin market on terms comparable to other institutions. The letter also cautioned against the use of discretionary evaluation factors such as market strength and profitability expectations. America’s Credit Unions said those factors could disadvantage smaller credit unions or limit consortium participation, contrary to what it described as Congress’s intent in establishing the GENIUS Act framework. The group asked NCUA to coordinate its rulemaking with other federal banking regulators so that the proposals necessary to implement the statute can be reviewed concurrently before final rules are issued.

Changes to proposal necessary. The America’s Credit Unions letter follows other industry responses to the NCUA proposal. Earlier this month, the American Bankers Association urged NCUA to pause the rulemaking until related requirements addressing capital, liquidity, risk management, and other prudential issues are proposed, while the Defense Credit Union Council called for targeted refinements and emphasized the need for a flexible, risk-appropriate, and consistent framework. (see Banking and Finance Law Daily, Apr. 14, 2026). In its public statement summarizing the comment letter, America’s Credit Unions said the proposal should use flexible approaches to expand credit union participation in stablecoin markets. The group highlighted the same themes raised in its filing: support for consortium-based issuance, flexibility for PPSI subsidiaries outside the CUSO framework, and additional clarity on reserves, custody, mixed ownership, and interagency coordination.

The GENIUS Act requires NCUA to issue implementing regulations for PPSIs under its jurisdiction by July 18, 2026. America’s Credit Unions’ filing suggests that, while the trade group supports the agency’s effort to move forward with a licensing framework, it wants the final rule to provide enough structural flexibility to ensure that smaller and consortium-based credit union participants are not left behind as stablecoin rules take shape.

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