The Federal Deposit Insurance Corporation (FDIC) has formally proposed its approach to regulating stablecoin issuers, as required by the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. The proposed rule will be open for public comment for 60 days, during which time the agency will pose 144 questions to gather input. The FDIC's role is to regulate US depository institutions that issue stablecoins from their subsidiaries, and the proposed rule sets out capital, liquidity, and custody standards for these firms.
However, the details will not be finalized until the agency has reviewed the input and written the final language. As expected, stablecoins will not be eligible for deposit insurance, and issuers will not be able to offer interest or yields on their tokens simply for holding or using them. The proposal also suggests that issuers will need to maintain capital to manage the risks of their business, as well as an operational backstop. The agency has also addressed the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins.
While regulators work to implement the GENIUS Act, some of its details are potentially being overhauled by the Senate's Digital Asset Market Clarity Act. The OCC, FDIC, and other agencies involved in implementing the rule have significant discretion in crafting regulations, but the GENIUS Act itself had bipartisan support in Congress.