The Federal Deposit Insurance Corp. has endorsed a proposed regulation to oversee stablecoin issuers, coinciding with ongoing Senate deliberations on the GENIUS Act specifics.

FDIC Chairman Travis Hill’s agency has put forward a proposed rule for stablecoins. (Jesse Hamilton/CoinDesk)

Key Takeaways:

• The Federal Deposit Insurance Corp. joined the Office of the Comptroller of the Currency in outlining a regulatory framework for stablecoin issuers pursuant to the GENIUS Act passed last year.
• This marks the FDIC’s second proposal regarding the GENIUS Act, released as Senate legislators consider possible modifications to the legislation’s provisions on stablecoin yields.

The U.S. Federal Deposit Insurance Corp. officially outlined its strategy for regulating stablecoin issuers, acting as one of the federal bodies mandated to draft and supervise rules under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act from the previous year.

Aligning closely with the Office of the Comptroller of the Currency’s February submission, the FDIC’s proposal will undergo a 60-day public consultation period, addressing an extensive list of 144 questions raised by the agency on Tuesday.

Charged with overseeing U.S. depository institutions, the FDIC’s mandate under the GENIUS Act involves regulating banks that issue stablecoins through their subsidiaries. Accordingly, it has established capital, liquidity, and custody standards for these entities, although the specifics will remain subject to change until the rule is finalized—a process expected to take several months as the agency reviews feedback and drafts the final text. This proposal follows the FDIC’s December submission concerning the issuer application process.

In line with the legislation, the proposal indicates that stablecoins will not qualify for deposit insurance typically available on traditional bank accounts, as per the FDIC chief.

The OCC’s prior proposal included a section that sparked early apprehension among crypto policy analysts regarding third-party managed reward programs, such as those on exchanges. Similarly, the FDIC stated that issuers cannot claim their tokens offer interest or yield «merely for holding or using a payment stablecoin,» including through third-party partnerships, per the staff presentation. However, industry experts believe that well-designed reward programs are unlikely to violate the regulations.

The FDIC’s Tuesday submission also outlined the capital requirements issuers must uphold to mitigate business risks, alongside an «operational backstop, separate from the capital requirement,» calculated based on the preceding year’s operating costs.

Furthermore, the agency examined «the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins,» proposing that «tokenized deposits meeting the statutory definition of ‘deposit’ would be treated identically» to other deposits.

As regulators move to implement the GENIUS Act, certain details may already be undergoing revision through the Senate’s Digital Asset Market Clarity Act. A dispute between the banking and crypto sectors over yield-bearing stablecoins evolved into a prolonged debate, which lawmakers claim is nearing resolution, although the bill has not yet reached the necessary hearing stage. Congress is scheduled to return from recess later this week.

The OCC, FDIC, and other agencies tasked with rule implementation, including the Treasury Department and market regulators, face minimal obstacles in shaping regulations as desired by Republican appointees. The White House of President Donald Trump has deviated from tradition by refusing to appoint any Democrats to the numerous vacancies across these agencies, leaving no Democratic voices to challenge the regulatory language.

Nevertheless, the GENIUS Act itself secured substantial bipartisan backing in both legislative chambers upon its enactment.