Stablecoins are often marketed using the same term, "regulated," even though the licenses behind that word can mean very different things. A money transmitter license, a state trust charter, and prudential supervision by a banking regulator all involve government oversight, but they carry different capital requirements, different reserve rules, and different consequences if an issuer fails.
For institutions choosing a stablecoin to hold, settle, or build on, that distinction isn't academic. It determines how your counterparty risk is actually structured. This piece walks through the main regulatory models and explains where RLUSD sits today.
Three types of oversight for U.S. issuers
Money transmitter licenses (MTLs). MTLs are a well-established regulatory standard for companies that transmit money in the US, providing state-level oversight of businesses that receive and move customer funds. Ripple, like many payments companies, maintains a broad portfolio of MTLs to support its regulated payments activities. But MTLs were designed primarily to regulate money transmission and stored value, not specifically the issuance of stablecoins, and many stablecoin issuers rely on a patchwork of state MTLs. As a result, requirements can vary by state and generally have not provided a uniform framework for stablecoin-specific matters such as reserve composition, redemption rights, and recurring reserve attestations. The GENIUS Act will introduce a more consistent federal framework for payment stablecoin issuers as its requirements take effect.
State trust company charters. Some stablecoin issuers operate under state trust company charters, including limited-purpose trust charters overseen by the New York Department of Financial Services (NYDFS). NYDFS oversight extends to the issuance and operation of the stablecoin itself, including reserve composition, segregation, independent attestations, and review of the technology and operational flows supporting the product, including material changes. Reserves must be held in permitted assets such as cash, short-dated U.S. Treasuries, and certain Treasury-backed repo, and segregated from the issuer's own assets.
Federal prudential oversight. The GENIUS Act, signed into law in July 2025, created a federal framework in which "permitted payment stablecoin issuers" above a $10 billion threshold are supervised directly by the OCC, FDIC, or Federal Reserve. Below that threshold, issuers can operate under qualifying state regimes. A small number of issuers are now also pursuing a national trust bank charter from the OCC, a federal license layered in addition to state oversight, which would mean supervision at both national and state levels simultaneously.
These aren't just different logos on a compliance page. They reflect different depths of ongoing scrutiny, different reserve rules, and different levels of transparency into what's actually backing the tokens in circulation.
| Money Transmitter License | State Trust Charter (e.g., NYDFS) | Federal Trust Bank Charter (OCC) | |
|---|---|---|---|
| Governs | Movement of customer funds and issuance of stored value | Issuance, custody, and reserves | Issuance, custody, and reserves |
| Stablecoin issuance | Used by some issuers today; MTL alone will not constitute a GENIUS-compliant issuance framework | State framework subject to alignment with GENIUS requirements | Federal framework subject to GENIUS requirements |
| Reserve rules | Vary by state; tailored to traditional payments use cases | Cash, government MMFs, short-dated Treasuries, Treasury repo; segregated | Cash, government MMFs, short-dated Treasuries, Treasury repo; segregated |
| Verification | Varies by state | Monthly independent CPA attestation (AICPA standards) | Ongoing federal exam cycle |
| Supervisor | State banking/financial services regulator | State banking/financial services regulator | OCC |
| Ongoing supervision | Periodic exams | Periodic exams and ongoing stablecoin specific reporting | Periodic exams |
Where RLUSD operates
RLUSD, launched in December 2024, is issued by Standard Custody & Trust Company (“SCTC”), a Ripple subsidiary, under a limited-purpose trust company charter granted by the NYDFS. That means RLUSD operates under the reserve, segregation, and independent-attestation requirements described above, with NYDFS conducting ongoing supervision. RLUSD's reserves are held in cash, short-term US Treasuries, and cash equivalents, and Ripple has engaged BNY Mellon as a reserve custodian.
In late 2025, Ripple received conditional approval from the OCC to establish Ripple National Trust Bank, a federally supervised trust bank, a step Ripple's CEO, Brad Garlinghouse described as extending its compliance standard to cover both federal and state oversight. This would add a federal supervisory layer on top of the existing NYDFS charter, rather than replacing it. Ripple National Trust Bank will serve as collateral trustee of the RLUSD reserves to protect holders in the unlikely event of a SCTC insolvency. It's worth being precise here: this is a conditional approval, one step in a multi-stage federal chartering process, not a completed charter.
This is Ripple's broader point about regulatory strategy: rather than treating a license as a one-time box to check, the goal is layered, ongoing supervision, state and federal, with independent reserve verification built in from day one. That level of oversight is deliberate: RLUSD is designed for institutions that need a stablecoin to meet the standards of trust, transparency, and regulatory rigor they expect from traditional financial infrastructure.
Clearing up the CFTC letter question
On December 8, 2025, then-CFTC Acting Chairman Caroline Pham announced a package of tokenized-collateral guidance: a digital assets pilot program for derivatives-market collateral, broader guidance on tokenized real-world-asset collateral (Staff Letter 25-39), and the withdrawal of an outdated 2020 advisory that had restricted futures commission merchants (FCMs) from accepting virtual currencies as customer collateral (Staff Letter 25-41). The centerpiece for stablecoins was the no-action position in Staff Letter 25-40, which lets FCMs accept certain non-securities digital assets, including payment stablecoins, as customer margin collateral.
To keep the rollout tightly monitored, the letter limited eligible collateral during an FCM's first three months of reliance to bitcoin, ether, and “payment stablecoins.” For purposes of the letter, a payment stablecoin must meet defined regulatory, reserve, and attestation criteria. The CFTC's accompanying press release specifically cited USDC as an example, but Staff Letter 25-40 itself does not name individual qualifying stablecoins such as RLUSD. Participating FCMs are also subject to weekly reporting and prompt-notification requirements during the initial monitoring period.
Ripple welcomed the announcement. Jack McDonald, Ripple's SVP of Stablecoins, said the CFTC's recognition of tokenized digital assets, stablecoins included, as eligible margin gave the industry "the regulatory clarity needed to move the industry forward," adding that Ripple looked forward to continuing to work with the CFTC and the broader industry on scaling digital assets responsibly.
Staff Letter 25-40 is a conditional staff no-action position governing how qualifying digital assets may be treated as collateral by FCMs. It is not a CFTC approval list, endorsement, or ranking of stablecoins by regulatory quality. The letter itself makes clear that the position reflects the view of the CFTC's Market Participants Division rather than the Commission as a whole.
The more useful question for anyone evaluating a stablecoin isn't "was it named in this particular letter," but: who supervises this issuer, on an ongoing basis, and what do they actually require of reserves, segregation, and verification? That's the question a trust charter answers directly. A collateral-eligibility letter answers a much narrower one.
Why this matters for institutions
If you're an exchange, payment provider, or fintech integrating a stablecoin into settlement, custody, or treasury operations, the regulatory model behind that stablecoin determines real operational facts:
- How reserves are verified: self-attested, third-party attested, or independently examined by a supervisor.
- What happens under stress: whether a supervisor has ongoing visibility into the issuer's balance sheet, or only reviewed it once at launch.
- How redemption is structured: segregation rules exist precisely to keep customer-backing assets separate from an issuer's operating funds.
RLUSD's trust charter model, recurring independent attestation, segregated reserves, active NYDFS supervision, and a pending federal charter layer, is designed to answer those questions with a documented supervisory record rather than a marketing claim. Other regulatory models, including money-transmitter-based approaches used by some large stablecoins, can also meet high standards, but the specific requirements and exam cadence differ by license type, and it's worth asking any issuer directly which model theirs is.
The takeaway
"Regulated" is doing a lot of work in stablecoin marketing right now, and it's worth unpacking before you rely on it. Ask any issuer five questions: Who supervises you, on what schedule? What are your reserves required to hold, and who verifies that? What happens to customer funds if you fail? The answers will tell you far more than the word "regulated" on its own, and they're the questions RLUSD's NYDFS trust charter, reserve custody arrangement, and pending federal charter are built to answer clearly.
