The Federal Deposit Insurance Corp. of the United States formally proposed its approach to stablecoin issuers as one of the federal financial regulators required to write and oversee rules under last year’s Guiding and Establishing National Innovation for American Stablecoins (GENIUS) Act.
The FDIC’s proposal — intended to closely align with what its sister banking agency, the Office of the Comptroller of the Currency, proposed in February — will be open for a 60-day public comment period on the agency’s lengthy list of 144 questions posed Tuesday.
The FDIC’s job is to police America’s depository institutions, and under the GENIUS Act, its role is to regulate those institutions issuing stablecoins from their subsidiaries. To that end, it imposed capital, liquidity, and custody standards on these companies, although the details won’t be set in stone until the rule is finalized — which likely won’t be until the agency spends additional months reviewing comments and drafting the final text. This is the banking agency’s second GENIUS Act proposal following its December presentation on the issuer application process.
As required by law, stablecoins will not benefit from the deposit insurance that banks maintain on traditional bank accounts, according to the proposal.
The OCC’s previous proposal included a section that raised some initial concerns among crypto policy experts, questioning how the agency would allow rewards programs run by third-party stablecoin relationships, such as exchanges. In a similar vein, the FDIC said issuers would not be able to guarantee that their tokens pay interest or earn “merely for holding or using a payment stablecoin,” according to the staff presentation, including through agreements with third parties. But crypto insiders have become convinced that well-tailored rewards programs shouldn’t break the rules.
Tuesday’s proposal from the FDIC also suggested the capital that issuers will need to maintain to manage business risk, plus “an operational safety net, separate from the capital requirement,” based on the previous year’s operating expenses.
The agency also addressed “the applicability of pass-through insurance to deposits held as reserves securing payment stablecoins,” proposing that “tokenized deposits that meet the legal definition of ‘deposit’ would not be treated differently” from other deposits.
As regulators work to implement GENIUS, some of its details are potentially already being rehashed by the Senate’s work on the Digital Assets Market Clarity Act. A clash between the banking and crypto industries over yield-bearing stablecoins has turned into a months-long debate that lawmakers say they are close to resolving, although the bill has yet to reach a necessary hearing. Congress returns from recess later this week.
The OCC, FDIC and other agencies involved in implementing the rule, including the Treasury Department and market regulators, have few obstacles to crafting regulations the way Republican appointees want. President Donald Trump’s White House has broken with past practices and refused to appoint Democrats to the many agency vacancies, so there are no Democrats to raise objections to the regulatory language.
But the GENIUS Act itself had significant bipartisan support in both houses of Congress when it passed.
Read more: US FDIC Proposes First US Stablecoin Rule From GENIUS Act
