Travis Hill, Chair of the U.S. Federal Deposit Insurance Corporation (FDIC), has definitively stated that the recently passed GENIUS Act does not grant the agency authority to insure stablecoin deposits. In prepared remarks for the American Bankers Association (ABA) Washington Summit, Hill clarified the regulatory stance under the new stablecoin payments law.
Hill explained that once the GENIUS Act is fully implemented, the FDIC will not permit the government to guarantee deposits held by stablecoin issuers. Furthermore, stablecoin issuers will be prohibited from claiming their digital assets are FDIC-insured. The agency also plans to block "pass-through insurance" arrangements by third parties, which would have allowed stablecoin holders to receive insurance coverage if a bank holding the issuer's reserves failed.
"If a payment stablecoin arrangement qualified for pass-through insurance, this would mean that if a bank holding the issuer’s reserves in a deposit account failed, the FDIC would insure the deposit account based on the interests of the stablecoin holders, rather than insuring the account as a corporate deposit account eligible for only $250,000 of insurance," Hill stated.
The GENIUS Act was passed by Congress and signed into law by President Donald Trump in July, establishing a U.S. regulatory framework for payment stablecoins. The law will be fully implemented 18 months after its signing or 120 days after related regulations are finalized by agencies including the FDIC and Treasury Department.
While the FDIC will not insure stablecoin deposits, issuers will still be required to fully back their dollar-pegged coins with reserves. Hill's remarks did not address the ongoing debate in the Senate regarding the digital asset market structure bill, which includes contentious issues like stablecoin yield, tokenized equities, and ethics.
The ABA has identified preventing payment stablecoins from becoming deposit substitutes that could reduce community bank lending as a key priority for the year, specifically advocating for prohibiting interest, yield, or rewards on stablecoins. The White House has held three meetings with industry leaders this year to discuss advancing the market structure bill, though its timeline remains uncertain.
