The Federal Deposit Insurance Corporation (FDIC) has formally unveiled its proposed approach to regulating stablecoin issuers, marking a significant step towards establishing federal guidelines for the industry. The proposal, which will be open to public comment for 60 days, aims to align with the rules proposed by the Office of the Comptroller of the Currency (OCC) in February. The FDIC's role, as outlined in the GENIUS Act, is to regulate depository institutions that issue stablecoins through their subsidiaries, and the proposal sets out capital, liquidity, and custody standards for these firms.
However, the details of these standards will not be finalized until the agency has reviewed the public comments and written the final language. As expected, stablecoins will not be eligible for deposit insurance, which is typically maintained by banks for traditional banking accounts. The proposal also clarifies that issuers will not be allowed to represent that their tokens offer interest or yield simply for holding or using a payment stablecoin, although properly tailored rewards programs are unlikely to be affected. The FDIC's proposal suggests that issuers will need to maintain sufficient capital to manage the risks associated with their business, as well as an operational backstop to cover potential expenses.
The agency has also addressed the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins, proposing that tokenized deposits that meet the statutory definition of 'deposit' will be treated the same as other deposits. While regulators work to implement the GENIUS Act, lawmakers are still debating the details of the legislation, including the Digital Asset Market Clarity Act, which could potentially overhaul some of the provisions. The lack of Democratic appointees in key agencies has given Republican appointees greater control over the regulatory language, although the GENIUS Act itself had bipartisan support in Congress.