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 proposed rule 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 is to regulate US depository institutions that issue stablecoins from their subsidiaries, and the proposal includes capital, liquidity, and custody standards for these firms. However, the details of the rule 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 allowed to represent that their tokens pay interest or yield 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 their 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 FDIC's proposal is the second GENIUS Act proposal from the banking agency, following its December pitch on the issuer application process.