In a significant development, the US Federal Deposit Insurance Corp has put forth a proposed rule to oversee stablecoin issuers, as mandated by the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. This 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 consider input on its 144 questions. The FDIC's role, as outlined in the GENIUS Act, is to regulate depository institutions that issue stablecoins through their subsidiaries, and the proposal includes capital, liquidity, and custody standards for these firms. Notably, stablecoins will not be eligible for deposit insurance, and issuers will be prohibited from representing that their tokens offer interest or yield simply for holding or using a payment stablecoin.
The proposal also addresses the capital requirements for issuers, operational backstops, and the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins. As regulators work to implement the GENIUS Act, lawmakers are simultaneously debating the Digital Asset Market Clarity Act, which may potentially overhaul some of the GENIUS Act's details. The FDIC's proposal is a significant step towards establishing federal rules for stablecoin issuers, and its outcome will be closely watched by the banking and crypto industries.