FDIC moves to regulate stablecoin issuers under the GENIUS Act

The US Federal Deposit Insurance Corporation (FDIC) has proposed new rules to regulate FDIC-supervised stablecoin issuers in accordance with the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which was signed into law nine months ago.

In a statement on Tuesday, the FDIC said its board of directors voted to issue a proposal that would set reserve, redemption, capital, risk management and custody standards for stablecoin issuers and insured depository institutions under its supervision.

The FDIC insures deposits at more than 4,000 financial institutions and supervises over 2,700 banks and savings associations to maintain stability in the US financial system.

The GENIUS Act granted the FDIC authority to oversee stablecoin activity within the banks and institutions that it supervises when it was signed into law in July, though it is scheduled to take effect on Jan. 18, 2027, if not earlier.

FDIC insurance won’t directly protect token holders

While reserve deposits backing a payment stablecoin would be insured under the FDIC’s proposed rules, that protection won’t extend to stablecoin holders, the FDIC said.

The FDIC argued that treating stablecoin holders as the insured depositors “seems inconsistent” with the GENIUS Act’s prohibition on payment stablecoins being subject to Federal deposit insurance.

However, the FDIC said its rules would still provide a more “secure environment” for stablecoin holders by offering them “increased assurance that their payment stablecoins are subject to elevated regulatory and supervisory standards.”

FDIC welcomes feedback

The FDIC invited the public to offer feedback on 144 questions related to how it should regulate stablecoin issuers. Comments will be accepted for the next 60 days.

It marks the FDIC’s second proposal for implementing the GENIUS Act, following a Dec. 19 plan to establish an application procedure for IDIs seeking approval to issue payment stablecoins through subsidiaries.

The Office of the Comptroller is also working to implement the GENIUS Act. The OCC would cover a broader scope of stablecoin activity than the FDIC, as it oversees national bank subsidiaries and certain nonbank issuers.

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