Federal approval. A qualifying nonbank fintech can apply to the Office of the Comptroller of the Currency (OCC) to become a federally qualified issuer. An uninsured national bank or eligible federal branch can also seek OCC approval. An insured depository institution takes a different route: it applies to its primary federal payment stablecoin regulator for approval to issue through a subsidiary. A fintech that banks with an insured institution does not become that bank’s subsidiary by signing a services agreement.
Timing matters for a new entrant. As of November 10, the OCC’s application page says it is not yet accepting applications or waiver requests. The prior-approval requirement generally begins January 18, 2027. The OCC’s transition guidance distinguishes existing U.S. issuers with substantially complete applications pending by that date from new entrants, which the agency generally expects to obtain approval before starting operations. A pending application is not permission to launch.
State approval. An eligible state-qualified issuer with no more than $10 billion in consolidated outstanding issuance may opt for supervision under a state regime substantially similar to the federal framework. The threshold measures tokens outstanding across the issuer, not annual payment volume or sales of one branded token. Treasury’s state certification procedures address the state’s regulatory regime; approval of an individual issuer is a separate decision. A founder considering this route should verify both with the proposed home-state regulator. Above the threshold, the Act generally requires transition to federal oversight within 360 days unless a waiver is granted.
Either route means building an issuer that can operate through a difficult redemption day. It needs eligible reserves backing outstanding tokens at least one-to-one, access to cash when holders redeem, accurate reserve reports, and people who can reconcile the bank and blockchain records. Direct issuance makes more sense when control over these functions is commercially important and the business can fund them even if adoption is slower than forecast.
Partnering with an issuer: whose coin is it?
In a white-label arrangement, the fintech supplies the brand and customer interface while another entity issues the token and owes redemption. The OCC’s final rule, published October 23, does not impose a one-brand-per-issuer limit. For issuers within its jurisdiction, however, the rule requires conspicuous redemption disclosures identifying the actual issuer. Where distinct reserve pools secure different brands, the monthly reporting provisions call for separate reserve composition information. A distinct ticker, by itself, tells a merchant nothing about whether its token has a separate reserve pool.
Before signing, ask the partner for its exact legal name, its present authority to issue, and its plan for operating after January 18. If the partner expects an approval or waiver, make the launch conditional on evidence that it obtained the authority it needs. Also review the fintech’s own role. As Part 3 of this series explains, an issuer’s authority does not automatically cover a distributor that receives merchant funds, controls wallets, or converts tokens to dollars.
What the agreement must settle before the first mint
Who can create tokens? Suppose a merchant wires $100,000 on Friday afternoon. The fintech sees a transfer notification, but the issuer’s bank has not confirmed receipt. Can the fintech’s software mint 100,000 tokens anyway? The agreement should identify what counts as settled funds, who verifies receipt, and who authorizes the mint. Test those answers against the actual signing permissions, including backup keys and administrator accounts. An issuer’s contractual right to reject a mint has little value if the distributor can execute it unilaterally.
How does a holder get paid? A merchant that receives tokens from a customer may have no account with the issuer. The customer terms should explain whether that merchant can redeem directly, must first complete onboarding, or must use an intermediary. Specify fees, cutoff times, when tokens are burned, and who owes payment if the burn succeeds but the bank transfer fails. That last scenario is a useful prelaunch test: support staff should be able to identify the unpaid claim and the person authorized to resolve it.
Who answers for mistakes and interruptions? Assign responsibility for screening customers, escalating suspicious activity, responding to lawful orders, and reconciling discrepancies. Give the issuer access to the records it needs to supervise delegated work. Negotiate who bears losses from an unauthorized mint, a compromised key, or an erroneous payout. An indemnity may allocate a loss between the companies; it cannot transfer a statutory duty or give a merchant access to dollars during an outage.
What happens when the partnership ends? Stopping new mints is relatively simple. Outstanding tokens may remain in wallets neither company controls. The agreement should fund and assign continuing redemptions, customer notices, record retention, and technical support. If the fintech can switch issuers, establish how holders will distinguish old tokens from new ones and who remains responsible for each. The ability to replace a vendor is much less valuable if no one has agreed to service yesterday’s tokens.
Frequently asked questions
Do we need a branded token to offer stablecoin payments?No. A fintech can integrate an existing token if the business goal is settlement rather than issuance. That option avoids creating a new redemption obligation, although custody, exchange, and transfer services still require their own licensing analysis.
Can we outsource reserve management if we become the issuer?Yes, subject to applicable requirements. The OCC’s final rule allows covered issuers to hire advisers for reserve management. The issuer still needs oversight, reliable reporting, and access to liquidity sufficient to meet its own obligations.
What should we ask a prospective issuer to demonstrate?Ask it to walk through one mint, one redemption, and one failed payout using the proposed accounts, contracts, and signing permissions. Compare that demonstration with what the merchant will see on screen. If the documents, software, and customer promise identify different decision-makers, resolve the discrepancy before launch.
If your company is weighing direct issuance against a white-label arrangement, you can contact Kelman PLLC to discuss the proposed funds flow, issuer authority, and terms governing minting and redemption.
Attorney Advertising. This article provides general information, not legal advice.