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 proposed rule, which aligns closely with the Office of the Comptroller of the Currency's February proposal, will be open for public comment for 60 days, during which time the agency will seek feedback on 144 questions.
The FDIC's primary focus is on policing US depository institutions, and under the GENIUS Act, it is responsible for regulating these institutions when they issue stablecoins through their subsidiaries. As such, the agency has outlined capital, liquidity, and custody standards for these firms, although the specifics will not be finalized until the rule is completed, a process that is expected to take several months. Notably, stablecoins will not be eligible for deposit insurance, which is typically provided to traditional banking accounts. The proposal also addresses concerns surrounding rewards programs managed by third-party stablecoin relationships, stating that issuers cannot claim that their tokens offer interest or yields simply for holding or using a payment stablecoin.
Furthermore, the FDIC has suggested that issuers will need to maintain capital to manage business risks, as well as an operational backstop separate from the capital requirement, based on the previous year's operating expenses. The agency has also clarified the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins, proposing that tokenized deposits be treated similarly to other deposits.
While regulators work to implement the GENIUS Act, some details may be subject to change due to the ongoing work on the Senate's Digital Asset Market Clarity Act. 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.