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) February proposal, is open for a 60-day public comment period and includes 144 questions posed by the agency.
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 input 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 yield on their tokens simply for holding or using a payment stablecoin. The proposal also suggests that issuers will need to maintain capital to manage the risk of their business, as well as an operational backstop based on the previous year's operating expenses.
The agency has also addressed the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins, proposing that tokenized deposits that satisfy the statutory definition of 'deposit' would be treated no differently than other deposits. While the 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. The OCC, FDIC, and other agencies involved in implementing the rule have few impediments in crafting regulations, and the GENIUS Act itself had drawn significant bipartisan support in both chambers of Congress when it was passed into law.