In a significant development, the US Federal Deposit Insurance Corporation has formally proposed its approach to regulating stablecoin issuers, as mandated by the Guiding and Establishing National Innovation for US Stablecoins Act. The proposal, which aligns with the Office of the Comptroller of the Currency's earlier suggestion, will be open for public comment for 60 days, during which time the agency will solicit feedback on 144 questions.
The FDIC's primary role is to regulate US depository institutions, and under the GENIUS Act, it is responsible for overseeing these institutions when they issue stablecoins through their subsidiaries. To this end, the agency has proposed capital, liquidity, and custody standards for these firms, although the specifics will be finalized only after the agency has reviewed the feedback and drafted the final language. As expected, stablecoins will not be eligible for deposit insurance, which is typically maintained by banks for traditional accounts.
The FDIC's proposal also addresses the issue of rewards programs managed by third-party stablecoin relationships, stating that issuers cannot claim that their tokens offer interest or yield simply for holding or using a payment stablecoin. Furthermore, the agency has suggested that issuers will need to maintain a certain level of capital to manage the risks associated with their business, as well as an operational backstop to cover previous year's operating expenses.
The proposal also clarifies the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins, stating that tokenized deposits that meet the statutory definition of 'deposit' will be treated similarly to other deposits. While regulators work to implement the GENIUS Act, lawmakers are simultaneously debating the Digital Asset Market Clarity Act, which may potentially overhaul some of the GENIUS Act's provisions. The lack of Democratic appointees in key agencies has given Republican appointees significant leeway in crafting regulations, although the GENIUS Act itself enjoyed bipartisan support in Congress.