US Federal Deposit Insurance Corp. formally proposed its approach to stablecoin issuers as one of the federal financial regulators to write and oversee rules under last year’s Guiding and Establishing National Innovation for US 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 long list of 144 questions posed Tuesday by the agency.
The FDIC’s job is to oversee US depository institutions, and under the GENIUS Act, its role is to regulate such institutions that issue stablecoins from their subsidiaries. To that end, it set capital, liquidity and custody standards for those firms, though the details won’t be set in stone until the rule is finalized — likely not until the agency spends additional months reviewing input and writing the final language. This is the second GENIUS bill from the banking agency following its December pitch on the issuer application process.
As expected under the law, stablecoins will not enjoy the deposit insurance that banks maintain on traditional bank accounts, according to the proposal.
The OCC’s previous proposal had a section that caused some concern among crypto policy experts who wondered how the agency would allow for reward programs managed by third-party stablecoin relationships, such as exchanges. Similarly, the FDIC said issuers would not be able to represent that their tokens pay interest or returns “simply for holding or using a payment stablecoin,” according to the staff presentation, including through agreements with third parties. But crypto insiders have become familiar with the fact that properly tailored rewards programs should not run afoul of the rules.
The FDIC’s Tuesday proposal also proposed the capital that issuers would need to maintain to manage the risk of the business, plus “an operational backstop, 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 backing stablecoins,” and suggested that “tokenized deposits that meet the statutory 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 revised by work on the Senate’s Digital Asset Market Clarity Act. A clash between the banking and crypto industries over yield-bearing stablecoin holdings turned into a months-long debate that lawmakers have said they are close to resolving, although the bill has yet to reach a required 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 rules the way Republican appointees want. President Donald Trump’s White House has broken with past practice and declined to name any Democratic appointees to the many vacancies across the agencies, leaving no Democrats to raise objections to legislative language.
But the GENIUS Act itself had drawn significant bipartisan support in both houses of Congress when it was passed into law.
Read more: US FDIC Proposes First US Stablecoin Rule Coming Out of GENIUS Act
