The US Federal Deposit Insurance Corporation has formally introduced its proposed approach to regulating stablecoin issuers, as mandated by the Guiding and Establishing National Innovation for US Stablecoins Act. The proposal, which aligns with the Office of the Comptroller of the Currency's February proposal, will be open for public comment for 60 days, during which time the agency will gather feedback on its 144 questions. The FDIC's primary role is to regulate US depository institutions, and under the GENIUS Act, it is responsible for overseeing these institutions' issuance of stablecoins from their subsidiaries.

To achieve this, the FDIC has proposed capital, liquidity, and custody standards for these firms, although the specifics will not be finalized until the agency has reviewed the public comments and drafted the final language. As expected, stablecoins will not be eligible for deposit insurance, which is typically maintained by banks for traditional accounts. The FDIC's proposal also addresses the issue of rewards programs managed by third-party stablecoin relationships, stating that issuers cannot represent their tokens as paying interest or yield simply for holding or using a payment stablecoin. The agency has proposed that issuers maintain sufficient capital to manage business risks, as well as an operational backstop based on the previous year's operating expenses.

Furthermore, the FDIC has clarified the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins, suggesting that tokenized deposits satisfying the statutory definition of 'deposit' would be treated similarly to other deposits. While regulators work to implement the GENIUS Act, some of its details may be revised by the ongoing work on the Senate's Digital Asset Market Clarity Act.

A debate between the banking and crypto industries over yield-bearing stablecoin holdings has been ongoing, but lawmakers are reportedly close to resolving the issue. The regulatory agencies, including the Treasury Department and market regulators, have the flexibility to craft regulations as desired, given the absence of Democratic appointees.

However, the GENIUS Act itself had received significant bipartisan support in both chambers of Congress upon its passage into law.