Paradigm has pushed back against the U.S. Federal Deposit Insurance Corporation’s proposed framework for payment stablecoin issuers, arguing that the agency’s interpretation of the GENIUS Act unlawfully extends a yield prohibition to third-party firms. In a comment letter filed on June 9, 2026, the crypto investment firm said the FDIC should withdraw provisions that would presume an issuer violates the law if an affiliate or related third party pays rewards to stablecoin holders.
The core dispute centers on whether the GENIUS Act allows regulators to ban independent companies—such as exchanges, wallet providers, and fintech platforms—from offering activity-based yield. Paradigm maintained that Congress deliberately limited the prohibition to stablecoin issuers, rejecting broader restrictions during legislative debate. “Nothing in the GENIUS Act permits the FDIC to either prohibit third parties from paying yield,” the firm stated.
Paradigm backed other guardrails in the proposal, including 1:1 reserve backing, monthly reporting, and authorization for banks to offer custody and exchange. However, the company challenged additional operational requirements such as mandatory weekly reports, separate reserve pools for white‑label stablecoins, and a lack of clear resolution procedures for national trust banks. It recommended monthly reporting and subledgering practices aligned with proposals from the Office of the Comptroller of the Currency.
Other industry participants echoed the concerns. Consensys raised alarm that the FDIC’s draft could capture ordinary commercial arrangements involving distribution partners and brand licensing. Circle, the issuer of USDC, urged regulators to clearly differentiate payment stablecoins from tokenized bank deposits. USDC carried a market cap of approximately $75.05 billion at the time of the filing, underscoring the substantial scale of the regulated stablecoin market that would be affected.
The FDIC’s proposed rule—published in the Federal Register as 91 FR 18534—closed its comment period on June 9, 2026. Under the rule’s timeline, the GENIUS Act framework could take effect as early as January 18, 2027, or 120 days after final rules are issued. Paradigm’s objection, if heeded, could reshape the final playbook and allow third-party reward programs to continue operating without violating the yield ban.
