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 proposal, which aligns with the Office of the Comptroller of the Currency's (OCC) proposal in February, will be open for a 60-day public comment period. The FDIC's role is to regulate US depository institutions that issue stablecoins from their subsidiaries, and the proposal sets out capital, liquidity, and custody standards for these firms.
However, the details will not be finalized until the agency has reviewed input and written 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, and addresses 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 work on the Senate's Digital Asset Market Clarity Act, which is still being debated.