Key Highlights
- FDIC approved a comprehensive regulatory framework for stablecoin issuers implementing the GENIUS Act provisions
- The framework establishes standards for reserve holdings, capital buffers, liquidity management, and custody protocols
- Federal deposit insurance will not extend to stablecoin holdings
- Public feedback is being solicited through a 60-day window featuring 144 specific regulatory questions
- Congressional negotiations continue regarding certain provisions, particularly concerning yield-generating mechanisms
The Federal Deposit Insurance Corporation has unveiled a detailed regulatory structure for entities issuing stablecoins. This development comes after the enactment of the Guiding and Establishing National Innovation for U.S. Stablecoins Act—commonly referred to as the GENIUS Act—which President Donald Trump signed into law previously.
On Tuesday, the FDIC board approved the release of this 191-page regulatory document. The agency has launched a 60-day consultation period and is seeking responses to 144 distinct questions from stakeholders and the general public.
The regulatory framework establishes operational guidelines for stablecoin operations that function as subsidiaries of federally insured banking institutions. Key areas addressed include permissible reserve assets, minimum capital thresholds, liquidity maintenance obligations, and custodial safeguarding measures.
FDIC Chair Travis Hill emphasized the sector’s explosive expansion. He observed that traditional banking institutions and cryptocurrency enterprises are becoming increasingly interconnected, with digital asset companies pursuing banking licenses while established financial institutions explore tokenized asset opportunities.
The GENIUS Act stipulates that stablecoins must maintain 100% backing through U.S. dollar holdings or equivalent highly liquid instruments. The legislation further requires yearly independent audits for issuers whose market capitalization exceeds $50 billion and establishes guidelines for overseas operations.
The FDIC explicitly stated that stablecoin holdings will remain outside the federal deposit insurance system. According to the proposal, payment stablecoins do not receive backing from the full faith and credit of the United States government.
Interest-Bearing Features and Incentive Structures
The FDIC’s proposal tackles the contentious issue of stablecoin returns. Issuers are prohibited from advertising that their tokens generate interest or returns merely through possession or transaction usage. This restriction encompasses arrangements facilitated by intermediary platforms like cryptocurrency exchanges.
Nevertheless, sector experts suggest that carefully designed incentive mechanisms could remain permissible within the framework as currently drafted.
The proposal further delineates how deposit insurance coverage applies to funds held as collateral supporting stablecoin issuance. Tokenized deposits satisfying the statutory definition of deposits would receive identical treatment as conventional deposits.
This represents the FDIC’s second regulatory proposal implementing the GENIUS Act. The initial document, published in December, addressed the licensing application procedures for prospective issuers. The Office of the Comptroller of the Currency published its corresponding proposal in February, while the Treasury Department issued a complementary notice last week addressing state-level supervision of smaller-scale issuers.
Ongoing Congressional Discussions
As regulatory agencies advance their implementation efforts, the Senate continues deliberations on specific aspects of the GENIUS Act legislation. A prolonged dispute between banking sector representatives and cryptocurrency industry advocates regarding yield-generating stablecoins has persisted for several months.
Legislators have indicated they are nearing consensus on this matter, though the legislation has not yet progressed to committee hearings. Congressional sessions resume later this week following a recess period.
The FDIC’s proposed regulations will remain provisional until the agency completes its review of submitted public feedback and drafts final regulatory language—a timeline anticipated to extend several additional months.
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