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NASCUS Proposed Rule Summary
NCUA Rules & Regulations Part 708a and 708b

March 2026
As part of its “Deregulation Project”, NCUA is proposing to amend Part 708a governing conversion of federally insured credit unions (FICUs) into banks and Part 708b governing voluntary termination of share insurance.. The NCUA Board proposes to eliminate certain prescriptive procedural, disclosure, and communication requirements.

Parts 708a and 708b apply to federally insured state credit unions by reference in part 741.208.

NCUA’s proposed changes have been issued as two separate requests for comments.
Comments for both are due to NCUA on or before 11:59 p.m. Eastern, April 13, 2026.

You may read the proposed changes to Part 708a here.

You may read the proposed changes to Part 708b here.

Summary of the Proposed Changes

Proposed Changes to Part 708a Bank Conversions of FICUs

NCUA proposes eliminating several sections within subpart A “Conversion of Insured Credit Unions to Mutual Savings Banks”.

§ 708a.101 – eliminating the definition of “clear and conspicuous”

Part 708a.101 provides the definition for “clear and conspicuous” disclosures. The definition mandates specific formatting, such as bold type and a minimum 12-point font size. NCUA now believes this requirement is “overly prescriptive,” and “unnecessary” and can hinder effective communication. NCUA notes that while the Federal Credit Union Act (FCUA) requires member notice, it is silent on specific formatting.

NCUA proposes eliminating the requirements specifying the bold type and font size, leaving the term “clear and conspicuous” to speak for itself.

§ 708a.103(a)(1) – eliminating requirement for newspaper notice of the proposed conversion

This provision requires credit unions to post notice of the proposed conversion in the local newspaper. NCUA would eliminate the requirement for publication in a local newspaper. As amended, the provisions would require a credit union to publish a notice in a clear and conspicuous fashion in the lobby of its home and branch offices, on the credit union’s website, and a member’s home banking landing page, if it has one. If the notice is not on the home page of the website, the home page must have a clear and conspicuous link to the notice, visible on a standard monitor without scrolling, to the notice. These notices must be published no later than 30 days before a board of directors votes on a proposal to convert.

§ 708a.104 – elimination of prescriptive requirements for post conversion vote disclosures

Part 708a.104 governs disclosures and communications to members following the credit union board of director vote on a proposed conversion. Many of these requirements are detailed typographical requirements or extended definitions of terms such as “simple and easy to understand.” NCUA is proposing:

Elimination of the Subparagraph (d)(2) requirements that the text appear in a box, on the front side of a page, on a single piece of paper, instructions on how the notice is folded into a cover letter and whether the back side of the notice must be blank.

Simplifying the requirement of Subparagraph (e) requiring communications to be written “in a manner that is simple and easy to understand. Simple and easy to understand means the communications are written in plain language . . .” NCUA proposes deleting the last sentence of the provision that provides detailed examples of what “easy to understand” and “plain language” including that credit unions use short explanatory sentences; use of definite, concrete, and use of everyday words, among others.

§ 708a.104(f)(5) & f(8) eliminating requirement for credit unions to submit member-to-member communications to the Regional Director if the credit union believes the communications are improper

Part 708a requires credit unions to facilitate a member’s desire to communicate with other members regarding a proposal to convert to mutual savings bank. Pursuant to the rules, the member submits the communication to the credit union for distribution to the other members. If the credit union believes the communication to be improper, pursuant to § 708a.104(f)(5) it must submit the communication to the Regional Director within 7 days for review.

NCUA would remove § 708a.104(f)(5) regarding submission of member materials to the Regional Director within 7 days of receipt of the member request if the credit union believes the member request to be improper. If finalized, credit unions would have the discretion to determine with a member communication related to a proposed conversion was proper.

If a credit union posts information on the planned conversion on its website, Subparagraph (f)(8) requires space on the website be made available to members to communicate regarding the proposed conversion. NCUA proposes eliminating the requirement to submit proposed website communications the credit union feels are improper to the RD.

§ 708a.113 – elimination of Non-Regulatory Guidance in Conversions

Part 708a.113 contains non-binding guidelines intended to help credit unions conduct a “fair and legal vote.” It offers advice on matters such as the applicability of state law, determining voter eligibility, and scheduling meetings. NCUA seeks comments on whether the guidelines should be re-issued as guidance or are unnecessary.

Proposed Changes to Part 708b Mergers and Termination of Share Insurance

The Board is proposing targeted amendments to its regulations at §§ 708b.106(d) and (e), 708b.206(b)(2), and 708b.206(c)(2), which govern member-to-member communications and share insurance communications to streamline requirements while maintaining essential member protections.

§ 708b.106 – elimination of NCUA’s merger website for member-to-member communication

Section 708b.106(d) allows for members to submit information related to a proposed merger for publication on an NCUA website. Section 708b.106(e) establishes criteria for comments to be published. NCUA believes notice to members of the proposed merger, and the provision of information upon which to make an informed decision on how to vote, are achieved through the provisions of paragraphs (a) through (c) of the section which describe when and what information must be provided by the credit union to its members. As NASCUS has long pointed out, it seems few members make use of the NCUA website for mergers: NCUA notes in 2024, only 34 of the 143 mergers received a comment.

§ 708b.206

To ensure members receive clear and accurate information regarding termination of federal share insurance, Sections 708b.206(b) and (c) mandate that every communication concerning an insurance conversion or termination must contain a conspicuous statement informing members that their accounts are insured by the NCUA, backed by the full faith and credit of the government, and that if the credit union converts to private insurance or terminates its federal insurance and then fails, the federal government does not guarantee the member will get their money back. The regulations require this disclosure to be prominent, mandating that it appear on the first page of the communication and be printed in capital letters, bolded, offset by a border, and in a font size at least one size larger than other text.

NCUA proposes eliminating § 708b.206(b)(2) and § 708b.206(c)(2), provisions requiring communications about share insurance or termination of federal share insurance to be printed in capital letters, bolded, offset by a border, and in a font size at least one size larger than other text.

In addition to soliciting comments on the proposed changes, NCUA seeks feedback on whether the remaining requirements for the disclosures to be “conspicuous” and appear on the first page of a communication where conversion is discussed are sufficient to ensure members receive prominent and effective notice regarding the termination of federal insurance.

NASCUS Proposed Rule Summary
NCUA Rules & Regulations 12 CFR Part 701.4(b)(3): Post Election Training for New Board Members

February 2026
As part of its sixth wave of the “Deregulation Project” NCUA is proposing to remove its rule which currently requires each Federal Credit Union (FCU) director to have a working familiarity with basic finance and accounting practices after appointment within a reasonable time, not exceeding six months.

The proposed rule applies only to Federal Credit Unions (FCUs) and does not apply to Federally Insured State Credit Unions (FISCUs). The proposal may be read in its entirety here: Post Election Training for New Board Members.

Comments are due to NCUA by April 27, 2026.

Background and Proposed Change

In a final rule published on December 28, 2010 the NCUA Board established Part 701.4 to document and clarify the fiduciary duties and responsibilities of FCU directors. The regulations intent was to address concerns about director accountability and to reinforce that directors act in the best interests of the FCU and its membership.

Part 701.4(b)(3) currently requires newly elected or appointed FCU directors to obtain, within a reasonable period not to exceed six months, at least a working familiarity with basic finance and accounting practices. This includes the ability to read and understand the credit union’s balance sheet and income statement and to ask substantive questions of management and auditors.

NCUA states that while director competency remains important, the Board believes members are best positioned to elect qualified individuals and the agency believes the prescriptive six-month requirement is unnecessary to maintain regulation. As part of its ongoing Deregulation Project, the Board is proposing to remove the prescriptive training requirement from regulation.

Key Considerations:

Removes the six-month director training requirement. FCUs would no longer be subject to a specific regulatory mandate requiring newly elected or appointed directors to attain a working familiarity with basic finance and accounting within a defined timeframe.
No change to overall board oversight expectations. NCUA will continue to evaluate board competency and governance through the examination process and supervisory framework.
Applies only to FCUs. The proposal does not apply to Federally Insured State Credit Unions (FISCUs).

NASCUS Proposed Rule Summary
NCUA Rules & Regulations 12 CFR Part 701.21 (c)(8): Loan Compensation/Commission

February 2026
As part of its sixth wave of the “Deregulation Project” NCUA is proposing to amend 12 CFR Part 701.21 (c)(8) to clarify requirements related to loan compensation and incentive arrangements. The proposal would add a definition of “overall financial performance” and clarify that the exception for compensation based on overall financial performance includes senior management employees.

The proposed rule applies to all Federally Insured Credit Unions (FICUs) through incorporation in Part 741.203(a) and may be read in its entirety here: Loan Compensation/Commission.

Comments are due to NCUA by April 27, 2026.

Background and Proposed Change

Part 701.21(c)(8) restricts compensation arrangements in connection with loan originations. The provision generally prohibits a FICU official or employee, or an immediate family member of either, from directly or indirectly receiving any commission, fee, or other compensation in connection with any loan made by their FICU. The regulation was originally adopted to address safety and soundness concerns and to reduce incentives that could encourage inappropriate lending practices.

The rule includes exceptions allowing certain types of compensation arrangements. These include:

Payment of salary to employees;
Incentive or bonus compensation based on the credit union’s overall financial performance;
Incentive or bonus compensation tied to loan originations for employees other than senior management, provided the board establishes written policies, internal controls, and ongoing monitoring at least annually; and
Compensation received from outside parties for activities performed outside the credit union by volunteer officials, non-senior-management employees, or immediate family members of volunteer official or employee, provided the arrangement does not involve referrals from the credit union.

While the rule provides an exception for incentive or bonus compensation based on a credit union’s “overall financial performance,” the regulation does not currently define “overall financial performance.” This has led to questions regarding how lending-related performance metrics may be incorporated into compensation plans. NCUA is proposing to add a principles-based definition of “overall financial performance” as a quantifiable metric or set of metrics, set by a credit union’s board of directors, used to measure achievement of targeted performance goals, which may include, but are not limited to, lending-related goals and metrics. Metric selection will be left to each credit union to allow flexibility to align compensation with organizational goals and market demands.

NCUA’s proposed definition of “overall financial performance” would be:

Overall financial performance means a quantifiable metric or set of metrics, set by a credit union’s board of directors, used to measure a credit union’s achievement of targeted performance goals. No compensation plan may permit any unsafe or unsound practice or any unsafe or unsound reliance on individual metrics which may include, but not be limited to, lending-related goals and metrics. No compensation plan may permit compensation in conflict with other applicable laws.

NCUA also proposes revising the regulatory text to expressly state that the overall financial performance exception applies to all employees, including senior management employees.

Key Considerations:

The proposal would define “overall financial performance,” providing regulatory clarity regarding how incentive compensation tied to lending metrics may be structured when based on organizational performance goals.
The proposal would amend § 701.21(c)(8)(iii)(B) to include senior management employees within the exception for compensation based on overall financial performance.
The proposal emphasizes that compensation programs tied to overall financial performance must continue to operate in a safe and sound manner.

NASCUS Proposed Rule Summary
NCUA Rules & Regulations 12 CFR 701.26 Credit Union Service Contracts

February 2026
As part of its sixth wave of the “Deregulation Project” NCUA is proposing to remove 12 CFR 701.26 which governs the organization and operation of Federal Credit Unions’ (FCUs) authority to enter into contracts for assets or services related to daily operations.

The proposed rule applies only to FCUs and does not apply to Federally Insured State Credit Unions (FISCUs). The proposal may be read in its entirety here: Credit Union Service Contracts.

Comments are due to NCUA by April 27, 2026.

Background and Proposed Change

NCUA originally issued rules related to FCU service contracts in the 1970s, with the current framework consolidated into Part 701.26 in 1982. The regulation has remained largely unchanged since a 1998 amendment removed a provision treating advance payments to a vendor for more than three months of service as an investment in a credit union service organization.

Part 701.26 currently governs an FCU’s authority to enter into contracts for assets or services related to its daily operations, including agreements with third-party vendors and other organizations. The regulation also permits one FCU to represent one or more other credit unions or organizations in contractual arrangements with a third party and authorizes the sharing of fixed assets. It does not grant FCUs the authority to provide services directly to other credit unions but provides authority to contract for assets and services that may be offered through a shared service arrangement.

Part 701.26 currently requires that all covered agreements be in writing and advise all parties that the goods and services provided are subject to NCUA examination to the extent permitted by law.

The Board is proposing to remove Part 701.26 in its entirety, stating that FCU authority to enter into contracts for operational services is inherent in its charter and general powers under the FCU Act. The Board considers the regulation superfluous, as the requirement that such agreements be in writing is a standard business practice that exists regardless of whether it is referenced in regulations. The Board also notes that the examination notice provision is unnecessary, as NCUA’s examination authority is generally limited to the products, services, and operations of the credit union rather than its vendors.

Key Considerations

The proposal would rescind Part 701.26 in its entirety.
The Board continues to expect FCUs to adhere to standard business practices and maintain safe and sound practices regarding third-party contracts, including that all contracts be in writing.
The proposal states the Board is interested in comments on all aspects of the proposed rule. Additionally, the Board is asking for comments on:
- Whether part 721 should be amended to reflect FCU representative authority in joint operations and resource sharing situations (the Board has indicated it may amend part 721 when finalizing this rule if it determines an amendment is necessary for clarity).
Applies only to FCUs. The proposal does not apply to FISCUs.

NASCUS Proposed Rule Summary
NCUA Rules & Regulations 12 CFR 701.39(a)(1): Definitions Related to Statutory Lien

February 2026
As part of its sixth wave of the “Deregulation Project” NCUA is proposing to amend 12 CFR 701.39 by removing verbiage that the Board considers redundant as it offers no material value for Federal Credit Unions (FCUs) in determining if statutory or case law exists and is applicable to their operations.

The proposed rule applies only to FCUs and does not apply to Federally Insured State Credit Unions (FISCUs). The proposal may be read in its entirety here: Definitions Related to Statutory Lien.

Comments are due to NCUA by April 27, 2026.

Background and Proposed Change

Part 701.39 of NCUA’s regulations implements the statutory lien authority granted to FCUs under the Federal Credit Union Act. The regulation converted a prior policy statement into a regulation in 1999, giving FCUs the power to impress and enforce liens against member shares and dividends to satisfy any outstanding financial obligation owed to the credit union.

Part 701.39(a)(1) currently defines the term “except as otherwise provided by law or except as otherwise provided by federal law,” as:

“a qualifying phrase referring to a federal and/or state law, as the case may be, which supersedes a requirement of this section. It is the responsibility of the credit union to ascertain whether such statutory or case law exists and is applicable;”

The Board is proposing to remove paragraph 701.39(a)(1), stating that the definition is redundant. The Board believes the obligation to determine which laws govern FCU operations is a universal legal consideration and not one specific to this regulation.

Key Considerations:

Removes a paragraph from the statutory lien regulation. FCUs would no longer be subject to a regulatory provision requiring them to ascertain whether superseding statutory or case law exists and is applicable.
The Board has asked for additional feedback beyond the repeal proposal as to whether the commenters believe the provision is helpful and should be retained.

No substantive change to statutory lien authority. The proposal does not alter an FCU’s underlying power to impress and enforce a lien against a member’s shares and dividends.
Applies only to FCUs. The proposal does not apply to FISCUs.

NASCUS Proposed Rule Summary
NCUA Rules & Regulations 12 CFR Part 749: Records Preservation Program and Appendices – Record Retention Guidelines; Catastrophic Act Preparedness Guidelines

March 2026
As part of its seventh wave of the “Deregulation Project” NCUA is proposing to simplify and streamline Part 749 by clarifying the purpose of the regulation, updating the definitions, and removing the appendices. This proposal relates to a 2024 Advance Notice of Proposed Rulemaking (ANPR).

NASCUS submitted a comment letter relating to the 2024 ANPR which may be read in its entirety here: ANPR NCUA Part 749 Comment Letter.

The proposed rule applies to all Federally Insured Credit Unions (FICUs) by incorporation in Part 741.21, and may be read in its entirety here: Records Preservation Program and Appendices.

Comments are due to NCUA by May 11, 2026.

Background and Proposed Changes

Part 749 requires credit unions to maintain a records preservation program for vital records and currently includes two appendices addressing record retention and catastrophic act preparedness. In 2024, the NCUA issued an Advance Notice of Proposed Rulemaking (ANPR) soliciting comments on ways the agency could improve and update the program regulation and guidelines. Based on comments received in response to the ANPR, the Board is proposing revisions intended to simplify and streamline Part 749 by clarifying the purpose and scope of the regulation, updating the definitions, and removing the appendices.

The proposed changes include:

Removal of Appendix A and Appendix B, which the Board views as guidance rather than binding regulatory requirements.
Define “vital member services” and “vital records,” and revise the heading of part 749 to read “Vital Records Preservation Program.”
Add the term “vital” to section 749.0 to further clarify the regulation’s scope.
Clarify that a records preservation log may be maintained electronically and would permit the destruction of older versions of records unless retention is required by another law or regulation.

The proposal would also clarify that when a credit union uses a third-party service provider to maintain vital records, the credit union remains responsible for exercising effective oversight to ensure compliance with part 749.

Key Considerations

Other legal and regulatory retention requirements would still apply outside of part 749.
Credit unions may want to review internal policies and procedures that currently reference or rely on Appendix A or Appendix B.

NASCUS Proposed Rule Summary
NCUA Rules & Regulations 12 CFR Part 701.23: Eligible Obligations

February 2026
As part of its sixth wave of the “Deregulation Project” NCUA is proposing to amend 12 CFR 701.23, its regulation governing the purchase, sale, and pledge of eligible obligations, by removing prescriptive policy requirements and a detailed conflicts of interest and compensation framework.

The proposed rule applies only to Federal Credit Unions (FCUs) and does not apply directly to Federally Insured State Chartered Credit Unions (FISCUs). However, Part 741.8 addresses related asset purchases and assumptions of liabilities for FISCUs. The proposal may be read in its entirety here: Eligible Obligations.

Comments are due to NCUA by April 27, 2026.

Background and Proposed Changes

Part 701.23 currently governs an FCU’s authority to purchase, sell, and pledge eligible obligations, establishing requirements for written policies, board approval, and limitations on purchased obligation amounts.

The Board has determined that several provisions of Part 701.23 are not statutorily required and believes it imposes unnecessary burden. The Board is proposing to amend Part 701.23 by revising paragraphs (b)(6), (c), and (d) and removing paragraph (g). Specific changes include:

Paragraphs (b)(6), (c), and (d) would be revised to remove the prescriptive lists of items that must be addressed in an FCU’s written policies for the purchase, sale, and pledge of eligible obligations. FCUs would still be required to maintain written policies but would no longer be subject to a mandated framework, allowing boards to exercise their own business judgment.
Paragraph (g) would be removed in its entirety. The Board considers this framework duplicative and unnecessary as FCUs are already governed by broader conflicts of interest provisions in their bylaws and by the fiduciary duties of their officials.
Part 746 would be updated to reflect the redesignation of current paragraph (h) as paragraph (g) following the removal of paragraph (g). No substantive change is intended.

Key Considerations:

Although the proposed amendments to Part 701.23 apply only to FCUs, Part 741.8 addresses purchases of assets and assumptions of liabilities for FISCUs and references certain transactions described in Part 701.23(b)(1) or comparable state law for state-chartered credit unions.
The proposal would remove prescriptive written policy requirements from paragraphs (b)(6), (c), and (d), enabling a more principles-based approach. FCUs would still be required to maintain written policies for the purchase, sale, and pledge of eligible obligations, but would no longer be subject to mandated lists of specific items those policies must address.
The proposal would remove the conflicts of interest and compensation framework in paragraph (g). FCU boards would be permitted to establish their own reasonable policies, provided all transactions are conducted at arm’s length and in the best interest of the credit union.
The Board is specifically requesting comment on whether removing these prescriptive policy requirements and the conflicts of interest framework could create safety and soundness concerns or lead to imprudent risk-taking by FCUs.

NASCUS Proposed Rule Summary
NCUA Rules & Regulations 12 CFR 701.24: Refund of Interest (Loans)

February 2026
As part of its sixth wave of the “Deregulation Project” NCUA is proposing to rescind 12 CFR Part 701.24, which NCUA states is duplicative of authority already established in the Federal Credit Union Act (FCUA).

Section 701.24 allows FCUs to issue refunds of interest paid by members on loan products. Section 113(9) of the FCUA also empowers FCUs to issue interest refunds. However, § 701.24 also contains a limitation not found in the FCUA, therefore NCUA’s removal of § 701.24 would broaden FCU authority to refund interest.

Comments are due to NCUA by April 27, 2026.

Background and Proposed Change

Part 701.24 codifies the authority granted to FCU boards of directors under Section 113(9) of the FCU Act to authorize interest refunds to members from income earned during a dividend period. The regulation permits refund percentages to vary by loan type and interest rate, allows exclusion of certain loan categories, and limits refunds to periods in which dividends have been declared and paid. Part 701.24 allows for the refunds only at the end of a dividend period in which dividends were paid on shares.

The Board is proposing to rescind Part 701.24 in its entirety, noting that it is redundant of the authority already granted directly to an FCU’s board of directors in Section 113(9) of the FCU Act. The Board states that Section 113(9) is a clear and self-executing grant of authority, making the regulation unnecessary. Its removal reduces the number of sources FCUs must consult to ensure compliance. By removing § 701.24, NCUA would also eliminate the limitation on paying refunds only when dividends on shares have been paid.

Key Considerations:

The proposal would rescind Part 701.24 in its entirety
The underlying authority for interest refunds is preserved through Section 113(9) of the FCU Act
Applies only to FCUs. The proposal does not apply to FISCUs.
The proposal states the Board is especially interested in comments on whether the removal of Part 701.24 provides regulatory relief and whether any portion of the current regulation should be preserved.

NASCUS Proposed Rule Summary
NCUA Rules & Regulations Part 706 — Investments in and Licensing of Permitted Payment Stablecoins Issuers

February 2026
The NCUA proposes a new 12 CFR Part 706 to implement its responsibilities under the GENIUS Act[1], which establishes a federal framework for licensing and supervising Permitted Payment Stablecoin Issuers (PPSIs) that are subsidiaries of federally insured credit unions (FICUs).

Key purposes of the rule:

Define the licensing process for FICU subsidiaries seeking PPSI status.
Establish evaluation standards, application requirements, and timelines.
Limit FICUs to investing only in NCUA‑licensed PPSIs.
Clarify NCUA supervisory authority over FISCU subsidiaries issuing stablecoins.

A second rulemaking (future) will address prudential standards (capital, liquidity, reserves, technology, etc.). The proposed rule may be read in its entirety here [2].
Comments are due to NCUA by April 13, 2026.

Background

On July 18, 2025, the GENIUS Act became law and established a regulatory framework for payment stablecoins at both the Federal and State level.

Under the GENIUS Act, “insured depository institutions,” which the Act defines to include both FDIC-insured depository institutions and FICUs (collectively “IDIs”), cannot be issuers of payment stablecoins. Instead, IDIs must issue stablecoins indirectly through subsidiaries.

The GENIUS Act defines the term “subsidiary of an insured credit union” to mean:

an organization providing services to the insured credit union that are associated with the routine operations of credit unions, as described in section 107(7)(I) of the Federal Credit Union Act[3];
a credit union service organization, as such term is used under CFR 12 part 712, with respect to which the insured credit union has an ownership interest or to which the insured credit union has extended a loan; and
a subsidiary of a State chartered insured credit union authorized under State law.

The GENIUS Act requires issuers that are subsidiaries of IDIs (including subsidiaries of FICUs) to be regulated by the primary Federal payment stablecoin regulators and does not allow the option for state-level issuer licensing. Thus, the NCUA has jurisdiction over payment stablecoin issuers at all FICU subsidiaries.

Under the Act, only PPSIs may issue a payment stablecoin in the United States, subject to certain exceptions and safe harbors. PPSIs are subject to a number of requirements, including requirements related to reserves, capital, liquidity, illicit finance, and information technology risk management standards. Among those requirements, PPSIs must maintain reserves backing the stablecoin on a one-to-one basis using U.S. currency or certain other liquid assets, must publicly disclose their redemption policy and publish the details of their reserves monthly.

The GENIUS Act details the process for the primary Federal payment stablecoin regulators, which include the NCUA, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Board of Governors of the Federal Reserve System (Federal Reserve Board), to evaluate and review applications for licenses to be PPSIs and provides examination, supervision, and enforcement authority over PPSIs.

Other issues addressed in the GENIUS Act include the provision of custody services for payment stablecoins; application of the Bank Secrecy Act and anti-money laundering and economic sanctions requirements; and treatment of payment stablecoin issuers in insolvency proceedings. The GENIUS Act establishes clear prohibitions and penalties to prevent the misrepresentation of Federal backing or insurance for payment stablecoins and to ensure that only authorized products may be marketed as such.[4]

The Act explicitly dictates that payment stablecoins are not backed by the full faith and credit of the United States, they are not guaranteed by the U.S. Government, nor are they covered by deposit or share insurance from the FDIC or NCUA. Similarly, it is unlawful to market any product as a “payment stablecoin” in the United States unless it is issued pursuant to the GENIUS Act’s procedures.[5]

Finally, the Act imposes a number of rulemaking, review, and reporting requirements on the primary Federal payment stablecoin regulators, including the NCUA. This proposal proposes regulations to implement the statutorily required process for licensure of PPSIs subject to the NCUA’s jurisdiction. It also proposes regulations limiting FICUs to invest in NCUA-licensed PPSIs. At least one other forthcoming proposal, intended at this time, will propose regulations to implement the standards and restrictions imposed by the GENIUS Act on PPSIs.

Key Provisions of the Proposed Rule

Licensing Requirement for All FICU Subsidiary Issuers

A FICU (federal or state‑chartered) may only participate in payment stablecoin activity through a licensed subsidiary.

FICUs cannot issue stablecoins directly.
Only subsidiaries meeting the statutory definition of a “subsidiary of an insured credit union” may apply.
Applications must be jointly filed by:
- the subsidiary (the “Applying Issuer”), and
- any FICU Parent Company (≥10% voting control or functional control).

Restriction on Investments

FICUs may invest only in NCUA‑licensed PPSIs — even if other federal banking regulators license the issuer.

Application Components

Applications require:

Business plan, financials, pro formas.
Governance and management information.
Biographical & Financial Reports for officers/directors of:
- the Applying Issuer,
- It’s FICU Parent(s),
- any “Principal Shareholders” (≥10% non‑FICU owners).
Fingerprints for Issuer officers/directors.
Written certification that submissions contain no material misrepresentations.

Evaluation Standards

NCUA evaluates applications using statutory factors, including:

Ability to meet GENIUS Act reserve, redemption, and operational requirements.
Competence, experience, and integrity of officers, directors, and major shareholders.
Compliance history.
Safety and soundness considerations.
Strength and feasibility of the business plan.
Adequate capital and liquidity planning.

Timelines

30 days: NCUA must notify whether an application is “substantially complete.”
120 days after substantially complete notice: NCUA must approve or deny.
NCUA failure to respond within approval deadline means automatic approval.

Denials and Appeals

NCUA may deny issuer license only if activity would be unsafe or unsound.
Applicants get:

Detailed written explanation within 30 days of denial,
Right to a written/oral hearing before the NCUA Board within 30 days of appeal request if appeal request submitted within 30 days of denial notice,
Right to reapply.

Change in Control

A FICU becoming a new Parent Company of an existing PPSI must provide:

60‑day prior notice to NCUA,
Governance/competency disclosures.

AML / Sanctions Certification

Within 180 days of approval, and annually after, PPSIs must certify:

AML and sanctions compliance programs exist and are effective.
Failure to certify can result in revocation.

Treatment of Multi‑Tier Subsidiary Structures

All tiers of subsidiaries beneath a FICU (including FISCU subsidiaries) are treated as FICU subsidiaries for PPSI purposes.

Significant Considerations for State‑Chartered Credit Unions (FISCUs)

Although this is a federal rule, it directly impacts FISCUs in several ways:

FISCU Subsidiaries Are Fully Subject to NCUA Approval

Any FISCU subsidiary issuing stablecoins must be licensed by NCUA.
GENIUS Act does not allow a FISCU subsidiary to choose state regulation for PPSI status.

A FISCU’s Subsidiary Need Not Be a CUSO

The GENIUS Act definition of “FICU subsidiary” is broader than the NCUA CUSO regulation:

A FISCU subsidiary can qualify even if it does not primarily serve credit unions, meaning some state‑authorized subsidiaries fall under NCUA oversight even though they are not CUSOs today.

Potential Conflicts with State Law Powers

State law may authorize FISCUs to invest in or form broader types of subsidiaries than FCUs can, but under the proposed rule:

Any subsidiary intending to issue a payment stablecoin must comply with Part 706 regardless of state authority.
FISCUs must provide extensive governance and financial disclosures to NCUA.

Impact on State Investment Authority

The rule would prohibit FISCUs from:

Investing in PPSIs licensed by other federal regulators unless they also obtain an NCUA license.
Investing in state‑qualified PPSIs (regulated under state law alone).

This may limit options available under state investment statutes.

Examination and Supervision

FISCU subsidiaries licensed as PPSIs fall under:

NCUA’s direct exam authority (greater than traditional CUSO access-rights),
Ongoing AML/sanctions certification requirements,
Future prudential standards in forthcoming rulemakings.

This represents a new federal supervisory footprint over FISCU subsidiaries.

Key Considerations for State Regulators (SSAs)

Preemption and State Authority

The GENIUS Act provides:

Federal PPSI licensing preempts state licensing/chartering requirements for PPSI activities.
BUT it does not preempt:
- State authority over the FISCU itself,
- State supervision of the FISCU’s subsidiary for non‑PPSI activities.

Implication: SSAs retain chartering and safety/soundness authority, but NCUA becomes the primary regulator for stablecoin‑issuing subsidiaries.

Supervisory Coordination Challenges

Because:

FISCUs can create subsidiaries engaged in activities broader than CUSO activities, and
NCUA gains increased supervisory exam authority over those subsidiaries,

SSAs may need to increase coordination with NCUA on:

Subsidiary examination scopes,
IT/cyber reviews,
AML and sanctions program examinations,
Remediation of unsafe/unsound practices.

Monitoring Investment Limits

For FCUs, GENIUS Act ties subsidiaries back to the 1% CUSO investment cap.
For FISCUs:

State law investment limits still apply,
But NCUA approval and oversight impose practical constraints on ownership structures of PPSIs.

SSAs may need to monitor:

Whether FISCUs’ stablecoin activity increases risk to the share insurance fund,
Parent‑company change‑of‑control notifications.

Multi‑Tier Entities

NCUA treats all tiers of subsidiaries beneath a FISCU as PPSI‑subject entities if used for stablecoin issuance.

States may need to ensure consistent state‑level awareness of complex structures.

Consumer and Operational Risk Oversight

Future NCUA rulemakings will address:

Reserve requirements,
Redemption rights,
Technology and cybersecurity standards,
Incident reporting.

SSAs may expect significant operational complexity for FISCUs entering the stablecoin space.

[1] Public Law 119-27

[2] 91 FR 6531

[3] 12 U.S.C. 1757(7)(I)

[4] See 12 U.S.C. 5903(e).

[5] 12 U.S.C. 5903(e)(3).

NASCUS Summary

FinCEN Exceptive Relief from Requirement to Identify and Verify Beneficial Owners at Each Account Opening

February 2026

Through Order FIN-2026-R001, the Financial Crimes Enforcement Network (FinCEN) is granting exceptive relief from requirements governing the identification and verification of beneficial owners of legal entity customers at each account opening under its Customer Due Diligence Rule[1]. Under the order, financial institutions will no longer be required to reidentify and reverify beneficial owners each time an existing legal entity customer/member opens additional accounts.

The order affects all covered financial institutions[2] and may be read in its entirety here. NCUA’s accompanying notice to credit unions regarding the order is available here.

Background

FinCEN’s 2016 Customer Due Diligence (CDD) Rule requires covered financial institutions to identify and verify the beneficial owners of legal entity customers when opening new accounts. The rule was designed to address a deficiency in the anti-money laundering (AML) framework by improving transparency around the individuals who own or control legal entities and preventing misuse of the financial system for illicit activity.

Under the existing rule, institutions must collect and verify beneficial ownership information each time an existing legal entity customer opens a new account, even if the institution recently verified the same information. This requirement has been viewed as duplicative and burdensome, without materially improving AML outcomes.

On February 13, 2026, FinCEN issued Order FIN-2026-R001 granting exceptive relief from this requirement as part of broader efforts to modernize the Bank Secrecy Act (BSA) framework and to support its obligations under the Corporate Transparency Act (CTA) to revise the 2016 CDD Rule.

Summary

The order permits covered financial institutions to stop identifying and verifying beneficial owners of a legal entity customer at every subsequent account opening.

Instead, institutions may limit identification and verification to three circumstances:

When a legal entity customer first opens an account with the institution.
When the institution has knowledge of facts that would reasonably call into question the reliability of beneficial ownership information previously obtained about the legal entity customer.
As needed based on an organization’s risk-based procedures for ongoing customer due diligence.

Institutions may rely on previously collected beneficial ownership information if the customer certifies or confirms that the information remains accurate, and the institution must retain records of such confirmation. All other AML/CFT obligations under the BSA, including ongoing monitoring, suspicious activity reporting, and program requirements, remain unchanged.

The order states use of the exceptive relief is optional, and institutions may choose to continue existing practices if consistent with their risk profile or internal controls.

NCUA also reiterates the above by stating it is optional and credit unions are not required to use it.

Key Considerations

The order removes a repetitive procedural requirement but does not alter core AML program obligations, including risk-based monitoring and updating customer information.

Institutions relying on the relief will need to continue to maintain well-documented risk-based CDD policies and procedures that address when previously obtained beneficial ownership information should be updated or re-verified.
If an institution relies on prior beneficial ownership information, it must maintain documentation confirming that the customer certified or confirmed its accuracy.

Credit unions and other covered financial institutions may continue collecting beneficial ownership information at each account opening if doing so aligns with their risk tolerance or supervisory expectations.

[1] FinCEN, Customer Due Diligence Requirements for Financial Institutions, 81 FR 29398 (May 11, 2016)

[2] The phrase “covered financial institutions” is defined by reference at 31 C.F.R. § 1010.230(f)

NASCUS Proposed Rule Summary

NCUA Rules & Regulations 12 CFR Part 701 IRPS 06-1 Organization and Operation of Federal Credit Unions

February 2026

As part of its fifth wave of the “Deregulation Project” NCUA is proposing to remove Interpretive Ruling and Policy Statement (IRPS) 06-1 related to Federal Credit Union (FCU) chartering and field of membership guidance, due to the statement being redundant with existing provisions in NCUA’s FCU Chartering and Field of Membership Manual.

The proposed rule does not apply to Federally Insured State Credit Unions (FISCUs) and may be read in its entirety here.

Comments are due to NCUA by April 13, 2026.

Background

In 2006, the NCUA Board issued IRPS 06-1 as a final rule amending FCU field of membership regulations to limit underserved area additions to multiple common bond credit unions and to revise facility requirements applicable to underserved areas.

In 2010, NCUA incorporated relevant policies and procedures for FCUs into the Chartering and Field of Membership Manual (Part 701 Appendix B), which now serves as the primary source of governing guidance for FCU chartering and membership determinations.

With the policies established in IRPS 06-1 now being reflected in the Chartering and Field of Membership Manual the Board is proposing, as a part of its ongoing Deregulation Project, to remove IRPS 06-1 after determining that the statement is duplicative and no longer necessary as a standalone document.

Key Considerations

No change to underlying FCU field of membership or chartering obligations. Removal of IRPS 06-1 would not alter FCU obligations under the applicable statutory or regulatory requirements.
FCUs should rely on the Chartering and Field of Membership Manual as the controlling source of guidance.

NASCUS Proposed Rule Summary

NCUA Rules & Regulations 12 CFR Part §741.5: Notice of Termination of Excess Insurance Coverage

January 2026

As part of its fourth wave of the “Deregulation Project” NCUA is proposing an amendment to its rule governing notice requirements related to the termination of excess share insurance coverage under 12 CFR Part 741.5

The proposed rule applies to all Federally Insured Credit Unions (FICUs) and may be read in its entirety here: Notice of Termination of Excess Insurance Coverage.

Comments are due to NCUA by March 30, 2026.

Summary

12 CFR Part 741 of the NCUA’s regulations implements Title II of the Federal Credit Union Act (FCU), which governs the National Credit Union Share Insurance Fund (SIF). It prescribes requirements that all FICUs must satisfy to obtain and maintain federal share insurance, as well as payment of insurance premiums and the capitalization of deposit, with the SIF.

Part 741.5 addresses notice requirements applicable when a FICU terminates share insurance coverage in excess of that provided by the SIF. The rule is intended to ensure that members are informed when supplemental share insurance coverage is discontinued.

Under the current rule, a FICU is required to:

Provide written notice to all members at least 30 days prior to the effective date of termination of any excess share insurance coverage

The NCUA Board proposes to amend Part 741.5 by removing the specific requirement that members be notified 30 days in advance of the termination of excess share insurance coverage. Under the proposal, a credit union would instead be required to notify members prior to the termination of the coverage, without a defined advance notice period.

Why?

NCUA has proposed the amendment based on its determination that the existing 30-day advance notice requirement is overly prescriptive and may create unnecessary regulatory burden without enhancing safety and soundness.

The Board has indicated that requiring member notification prior to termination of excess share insurance coverage, without mandating a specific timeframe, provides credit unions with greater flexibility while continuing to ensure members are informed.

Key Considerations:

Credit Unions would still be required to notify members prior to termination of any excess share insurance coverage, with only the timing requirement removed
Only the prescriptive timing requirement is addressed in the proposal. There are no new obligations or other modifying aspects that are considered in the proposal

Proposed Rule: Rules & Regulations Part 708a and 708b