Quick Overview
- Federal regulators have issued a comprehensive regulatory framework targeting stablecoin issuers through the GENIUS Act
- The framework establishes standards for reserve holdings, capital thresholds, liquidity management, and asset custody protocols
- Federal deposit insurance will not extend to stablecoin holdings
- Regulators have launched a 60-day comment window, seeking feedback on 144 specific questions
- Congressional lawmakers continue negotiations over specific provisions, particularly concerning yield-generating mechanisms
The Federal Deposit Insurance Corporation has unveiled a detailed regulatory proposal targeting stablecoin issuers. The move comes after President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act—commonly referred to as the GENIUS Act—into law.
Regulators approved the 191-page framework on Tuesday, initiating a 60-day period during which stakeholders can submit feedback. The agency has presented 144 specific questions seeking industry and public perspectives.
The framework establishes operational standards for stablecoin issuers operating as subsidiaries under insured banking institutions. Key areas include requirements for reserve asset composition, minimum capital thresholds, liquidity management protocols, and custody operational standards.
FDIC Chair Travis Hill emphasized the sector’s explosive expansion. He observed that traditional banking institutions and cryptocurrency firms are converging, with digital asset companies pursuing banking licenses while established financial institutions expand into blockchain-based assets.
The GENIUS Act stipulates that stablecoins must maintain complete backing through U.S. dollar reserves or equivalent liquid instruments. The legislation also requires annual third-party audits for issuers exceeding $50 billion in market capitalization and establishes guidelines for international issuance.
Regulators explicitly stated that stablecoins will remain outside the federal deposit insurance system. The proposal emphasizes that payment stablecoins do not benefit from the full faith and credit guarantee of the United States government.
Interest-Bearing Mechanisms and Incentive Programs
Regulators specifically addressed the matter of stablecoin yield generation. Issuers cannot advertise that their tokens generate interest or returns merely through possession or transactional use. This restriction extends to arrangements facilitated by intermediary platforms including cryptocurrency exchanges.
Nevertheless, industry experts indicate that appropriately designed incentive programs may still comply with the regulatory language as currently drafted.
The framework also defines how deposit insurance coverage applies to funds held as collateral backing stablecoins. Tokenized deposits satisfying the statutory definition of a deposit would receive identical treatment as conventional deposit accounts.
This represents the second GENIUS Act-related proposal from the FDIC. The initial release in December addressed the application and licensing process for issuers. The Office of the Comptroller of the Currency published its framework in February, while the Treasury Department issued complementary guidance last week addressing state-level supervision of smaller-scale issuers.
Congressional Deliberations Continue
Even as regulatory agencies advance implementation efforts, the Senate continues refining certain aspects of the GENIUS Act legislation. A prolonged discussion between banking sector representatives and cryptocurrency industry advocates regarding yield-bearing stablecoins has persisted for several months.
Legislators have indicated they are approaching resolution on this matter, though the legislation has not yet proceeded to committee hearings. Congressional sessions resume following a recess later this week.
The FDIC’s proposed framework will remain in draft form until regulators analyze submitted public commentary and finalize the regulatory text, a timeline anticipated to span several additional months.
