A payments firm that wants merchants to settle invoices in a dollar‑linked stablecoin bearing its brand faces a key decision: become a permitted issuer of the stablecoin or partner with an existing issuer. The choice affects authority over issuance, costs, and liability for redemption failures.
Becoming a permitted issuer
Under the GENIUS Act, a payment stablecoin issuer must be able to redeem, convert, or repurchase tokens at a fixed monetary value. To qualify, a business must obtain permission either from the federal Office of the Comptroller of the Currency (OCC) or from a state regulator.
- Federal route: A non‑bank fintech, an uninsured national bank, or an eligible federal branch can apply to the OCC for a qualified issuer charter. Insured depository institutions must seek approval from their primary federal regulator for issuance through a subsidiary. As of the latest OCC notice, applications are not being accepted and the prior‑approval requirement is expected to begin on January 18, 2027.
- State route: An issuer with no more than $10 billion in consolidated outstanding tokens may qualify under a state regime that mirrors the federal framework. Issuers exceeding that threshold must transition to federal oversight within 360 days unless a waiver is granted.
Direct issuance requires the issuer to maintain one‑to‑one reserves, ensure cash availability for redemptions, provide accurate reserve reporting, and reconcile bank and blockchain records.
Partnering with an existing issuer
In a white‑label arrangement, the fintech supplies branding and the user interface while another entity issues the token and assumes redemption liability. The OCC’s final rule does not limit the number of brands per issuer, but it does require clear redemption disclosures identifying the actual issuer and separate reserve reporting for distinct token brands.
Before finalizing a partnership, the fintech should verify the issuer’s legal name, current authority to issue, and plans for compliance after the January 2027 deadline. The agreement must address minting authority, settlement verification, redemption processes, fee structures, and responsibility for errors or outages.
Key contractual considerations
- Define what constitutes settled funds before minting tokens.
- Specify how merchants can redeem tokens, including onboarding requirements and fee schedules.
- Allocate responsibility for compliance, suspicious‑activity reporting, and dispute resolution.
- Plan for continuation of redemption and support if the partnership ends, including handling of existing tokens.
Frequently asked questions
Do I need a branded token to offer stablecoin payments? No. A fintech can integrate an existing stablecoin for settlement without creating a new redemption obligation.
Can reserve management be outsourced? Yes, provided the issuer retains oversight and meets reporting and liquidity requirements.
What should I ask a prospective issuer? Request a walkthrough of a mint, a redemption, and a failed payout using the proposed accounts and signing permissions to ensure alignment of decision‑making authority.
Companies evaluating direct issuance versus a white‑label partnership can contact Kelman PLLC for guidance on funds flow, issuer authority, and minting and redemption terms.
