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 public comment for 60 days.
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 the comments 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 addresses the capital requirements for issuers and the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins. While the regulators work to implement the GENIUS Act, some of its details are being debated in the Senate, and lawmakers are close to resolving the issues. The FDIC's proposal is a significant step towards establishing federal rules for stablecoin issuers, and it will be interesting to see how the industry responds to the proposed regulations.