In a significant development, the US Federal Deposit Insurance Corporation has formally proposed its approach to regulating stablecoin issuers, as required by the Guiding and Establishing National Innovation for US Stablecoins Act. The proposal, which aligns closely with the Office of the Comptroller of the Currency's proposal in February, will be open for public comment for 60 days. The FDIC's role is to regulate US 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. 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 bill has not yet advanced to a hearing, but lawmakers have said they are close to resolving the debate over yield-bearing stablecoin holdings.