2026 and Fundamental Changes to the U.S. Payments System

2025 was a year of transition for the banking industry, with new agency leadership, downsizing of the bank regulatory agencies and neutering of the Consumer Financial Protection Bureau (CFPB), the rescission of regulations and guidance, a revised supervisory focus and framework, and significant changes to the payments system.

From my perspective, changes to the U.S. payments system may be the most fundamental, disruptive, and long lasting. At the core is passage of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act signed into law on June 18, 2025. The Act forces modernization of the payments system, reduces dependence on traditional systems like ACH and Fedwire, arguably enables banks to compete with financial technology providers, may disrupt deposit flow into traditional accounts and affect fee income, and potentially increases systemic risks. Related developments include OCC interpretations regarding crypto-assets, OCC approvals of national trust bank charters for cryptocurrency firms, state law developments, rapidly advancing technologies, and customer/market expectations.

The Genius Act

The Act provides a regulatory framework for the issuance of stablecoins by the private sector in the U.S. The law takes effect 18 months after enactment or 120 days after the Board of Governors of the Federal Reserve System (Federal Reserve), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration issue final regulations, whichever is earlier. In December 2025, the FDIC issued proposed rules applicable to FDIC-supervised institutions (i.e., state nonmember banks and state savings associations) seeking to issue payment stablecoins through a subsidiary. The OCC and Federal Reserve will be issuing their own implementing rules for national banks and state member banks, respectively.

What is a stablecoin and why should you care? The Act defines a payment stablecoin as a digital asset that is designed to be used as a means of payment or settlement that the issuer is obligated to convert, redeem, or repurchase for a fixed amount of monetary value and that the issuer represents will maintain, or create the reasonable expectation that it will maintain, a stable value.

Stablecoins are not securities or commodities. They are not a national currency, nor do they have deposit insurance. Issuers are required to redeem them for a fixed amount and must maintain stability by holding an appropriate level of highly liquid assets (reserves) against them. Acceptable assets include U.S. currency, deposits held at insured depository institutions, short-term U.S. Treasury securities and Treasury-backed reverse repurchase agreements, and money market funds.

Certain crypto firms, like Tether, have long issued their own stablecoins, and large U.S. banks have been using stablecoins in pilots and internally. However, most of the banks in this country have not focused on cryptocurrency and the subset category of stablecoins; cryptocurrency and stablecoins have not been something to understand and think about strategically. This has arguably changed. Why? Because the Act has established a regulatory framework bringing crypto and stablecoins into the mainstream — getting governmental approval conveys legitimacy. The Act has created a system that has the speed and versatility of cryptocurrency with the arguable stability of a bank deposit causing many to believe that the system will replace traditional payment systems like ACT and Swift. According to the Boston Consulting Group, the payments industry generated $1.9 trillion in annual revenue in 2024 and will top $2.4 trillion by 2029; banks arguably have the largest share of this and, therefore, the most to lose.

Who can issue stablecoins? Under the Act, only a permitted payment stablecoin issuer may issue a stablecoin, with some limited exceptions. Permitted issuers are a subsidiary of an insured depository institution that has been approved, a federal qualified payment stablecoin issuer, or a state-qualified payment stablecoin issuer. Any entity wanting to issue stablecoins must receive approval from a federal banking or credit union regulatory agency. States may approve entities if the state’s regulatory framework is substantially similar to the framework developed by federal banking regulators. State-level regulatory frameworks are reviewed by a Stablecoin Certification Review Committee chaired by the U.S. Treasury Secretary and composed of the chair of the FDIC and chair of the Federal Reserve. If a state-approved stablecoin issuer issues more than $10 billion in payment stablecoins, it is required to transition to the federal regulatory framework and become jointly supervised by their home state and a federal banking regulator.

What can issuers do? Approved issuers can issue stablecoins, redeem stablecoins, manage reserves, and provide custodial or safekeeping services. Issuers cannot pay holders any form of interest or yield and may not condition the availability of products or services to a customer based on whether that customer obtains an additional paid product or service from the permitted payment stablecoin issuer. Issuers are considered “financial institutions” for purposes of the Bank Secrecy Act and subject to bank-like prudential regulation.

For banks, a significant item of concern is whether an issuer can pay interest and thereby compete directly for deposits. Trade associations are pressing for legislation to close arguable gaps in the Act given some crypto firms are offering rewards and have found other ways to benefit customers, taking deposits away from banks. A January 5, 2026, letter from the American Bankers Association to members of the U.S. Senate estimated that “$6.6 trillion in bank deposits are at risk,” with potential negative impact on community bank lending due to this deposit flight.

Benefits of Stablecoins. Proponents state that stablecoins provide faster, cheaper, and more accessible payments. Skeptics point out that we already have a system that works and has been tested over time. We have same-day wire transfer, FedNow, ACH, and proprietary payment platforms.

Risks. Some of the arguable risks associated with stablecoins include liquidity, counterparty, market and technology integration risks, and regulatory uncertainty. Bank trade associations have raised concerns related to deposit disintermediation, financial stability, fraud, and the separation of banking and commerce.

Looking Forward to 2026

According to a research working paper by the Federal Reserve Bank of Kansas City, the “stablecoin market grew from a negligible size in 2020 to exceed $200 billion in assets just five years later. This rapid growth is expected to continue, with independent forecasters predicting the market will reach trillions of dollars over the next several years.” An Analytical Price of Stablecoin “Deposit” Insurance, Stefan Jacewitz, Nov. 19, 2025. According to this paper, the largest stablecoin issuer holds more assets than 99 percent of all U.S. banks and is larger than Signature Bank. As you might recall, Signature Bank failed in 2023 due to a run on deposits, with significant deposits from the cryptocurrency sector. Signature’s failure was considered a threat to financial stability, and U.S. officials triggered a systemic risk exception to back all deposits, even those above the amount insured by the FDIC.

Critical implementing regulations, interpretations, and approvals are expected in 2026. These new rules will establish the guardrails that will set the risk parameters going forward. Clarity, financial stability, consumer protection, and safe innovation are at stake.

For bank boards and management, now is the time to get educated on the Act and implementing regulations, and to consider the opportunities and the risks. Stablecoin is no longer in our future; it is here. On October 8, 2025, the Bank of North Dakota announced its new partnership with Fiserv to develop the state’s own stablecoin named the Roughrider coin. The press release states the “GENIUS Act establishes stablecoin as an accepted part of the financial system, allowing faster, more secure bank-to-bank transactions anywhere in the world.” In August 2025, St. Cloud Financial Credit Union, located in St. Cloud, Minnesota, announced it would be launching the first U.S. credit union stablecoin, the Cloud Dollar ($CLDUSD), as part of its CU-Digital Asset Vault. The Vault opened in 2025, to support three digital assets (Bitcoin, USD Coin and Ethereum), and Cloud Dollar debuted in December.