The Federal Deposit Insurance Corporation has formally proposed its approach to regulating stablecoin issuers, marking a significant step towards establishing federal rules for the industry. The proposal, which aligns with the Office of the Comptroller of the Currency's earlier proposal, will be open for public comment for 60 days.
The FDIC's role is to regulate depository institutions that issue stablecoins from their subsidiaries, and the proposal outlines capital, liquidity, and custody standards for these firms. However, the details will not be finalized until the agency reviews input and writes the final language. As expected, stablecoins will not be eligible for deposit insurance, and issuers will not be able to represent that their tokens pay interest or yield simply for holding or using a payment stablecoin.
The proposal also suggests that issuers will need to maintain capital to manage the risk of the business, plus an operational backstop based on previous year's operating expenses. While regulators work to implement the GENIUS Act, some details are potentially being overhauled by the work on the Senate's Digital Asset Market Clarity Act. The OCC, FDIC, and other agencies involved in implementing the rule have significant flexibility in crafting regulations, but the GENIUS Act itself had drawn significant bipartisan support in both chambers of Congress when it was passed into law.