In a significant step towards regulating the stablecoin industry, the US Federal Deposit Insurance Corporation (FDIC) has formally proposed its approach to governing stablecoin issuers. The proposal, which is open for public comment for 60 days, aims to align with the rules proposed by the Office of the Comptroller of the Currency in February.
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 of the rule are subject to change until the agency finalizes it after reviewing public input. As expected, stablecoins will not be eligible for deposit insurance, which is typically maintained by banks for traditional banking accounts. The proposal also addresses the issue of rewards programs managed by third-party stablecoin relationships, such as exchanges, and suggests that issuers will need to maintain capital to manage business risk, along with an operational backstop.
The FDIC's proposal is part of the implementation of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which was passed into law with bipartisan support. However, some details of the act are being re-examined by the Senate's Digital Asset Market Clarity Act, which is still pending.
The regulatory process is expected to continue, with the FDIC and other agencies involved in implementing the rule having few obstacles in crafting regulations.