The U.S. Federal Deposit Insurance Corporation formally proposed its approach to stablecoin issuers as one of the federal financial regulators required to draft and oversee rules under last year’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.
The FDIC proposal, intended to align closely with what its sister banking agency, the Office of the Comptroller of the Currency, proposed in February, will be open to a 60-day public comment period on the long list of 144 questions posed Tuesday by the agency.
The FDIC’s job is to police US depository institutions, and under the GENIUS Act, its role is to regulate institutions that issue stablecoins from their subsidiaries. To that end, it laid out capital, liquidity and custody standards for those companies, although the details won’t be final until the rule is finalized, something that isn’t likely to happen until the agency spends more months reviewing input and drafting final text. This is the banking agency’s second GENIUS Act proposal following its December presentation on the issuer application process.
As expected under the law, stablecoins will not enjoy the deposit insurance that banks maintain in traditional bank accounts, according to the proposal.
The OCC’s previous proposal had a section that caused some initial concern among crypto policy experts who wondered how the agency would allow rewards programs run by third-party stablecoin relationships, such as exchanges. Along the same lines, the FDIC said issuers would not be able to declare that their tokens pay interest or yield “simply by holding or using a payment stablecoin,” according to the staff presentation, even through agreements with third parties. But crypto experts are comfortable with the fact that properly designed rewards programs should not break the rules.
Tuesday’s FDIC proposal also suggested the capital issuers will need to maintain to manage business risk, plus “an operating support, separate from the capital requirement,” based on operating expenses from the prior year.
The agency also addressed “the applicability of transfer insurance to deposits held as reserves that back payment stablecoins,” proposing that “tokenized deposits that satisfy the legal definition of ‘deposit’ would not be treated differently” than other deposits.
As regulators work to implement GENIUS, some of its details may already be under review by work on the Senate’s Digital Asset Market Clarity Act. A clash between the banking and crypto industries over holdings of yield-generating stablecoins has turned into a months-long debate that lawmakers have said they are close to resolving, although the bill has not yet advanced to the necessary hearing. Congress returns from a break later this week.
The OCC, the FDIC and other agencies involved in implementing the rule, including the Treasury Department and markets regulators, have few impediments to crafting regulations the way Republican appointees want. President Donald Trump’s White House broke with previous practice and refused to name any Democratic appointees to the numerous vacancies at the agencies, so there are no Democrats who can raise objections to the regulatory language.
But the GENIUS Act itself had gained significant bipartisan support in both chambers of Congress when it became law.
Read more: US FDIC proposes first US stablecoin rule arising from GENIUS Act
