The U.S. Federal Deposit Insurance Corp. (FDIC) has formally proposed its regulatory approach for stablecoin issuers, marking a significant step in implementing the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The proposal, released on Tuesday, aligns closely with a framework previously put forward by the Office of the Comptroller of the Currency (OCC) in February.
The FDIC's proposal outlines capital, liquidity, and custody standards for depository institutions that issue stablecoins through subsidiaries. However, the specific details of these standards will not be finalized until after a 60-day public comment period on the agency's list of 144 questions. The rulemaking process is expected to take several more months as the agency reviews input and drafts the final language.
A key provision clarifies that stablecoins will not be eligible for the same deposit insurance that protects traditional bank accounts. The proposal also addresses "the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins," suggesting that "tokenized deposits that satisfy the statutory definition of 'deposit' would be treated no differently" than other deposits.
The FDIC explicitly stated that issuers cannot represent that their tokens pay interest or yield "simply for holding or using a payment stablecoin," including through arrangements with third parties like exchanges. While this initially caused concern among crypto policy experts, industry insiders have grown comfortable that properly structured rewards programs can comply with the rules.
In addition to capital requirements for managing business risk, the proposal mandates "an operational backstop, separate from the capital requirement," based on the previous year's operating expenses. This is the FDIC's second proposal under the GENIUS Act, following a December pitch on the issuer application process.
While regulators work to implement the GENIUS Act, its details may be influenced by the ongoing legislative process for the Senate's Digital Asset Market Clarity Act. A months-long debate between the banking and crypto industries over yield-bearing stablecoin holdings is reportedly close to resolution, though the bill has not yet advanced to a needed hearing.
The regulatory process faces few impediments, as President Donald Trump's administration has broken with past practice by declining to name any Democrat appointees to vacancies across agencies like the FDIC, OCC, Treasury Department, and market regulators. This allows Republican appointees to craft regulations without Democratic objections. The GENIUS Act itself enjoyed significant bipartisan support when passed by Congress.
