The Federal Deposit Insurance Corp., which backs deposits at thousands of US banks, is la
ying out its guidelines for how those institutions and their fintech subsidiaries can use stablecoins as digital currencies become more widely accepted in the financial system.
New guidelines would seek to establish requirements related to reserve assets, redem
ptions of outstanding stablecoins, permissible activities and capital, among others, FDIC Chair Travis Hi
ll said Tuesday in prepared remarks at the agency’s board meeting in Washington.
The move, which is subject to public comment, is part of rulemaking efforts by FDIC, Office of the Comptroller of the Currency and the Federal Reserve after la
st year’s passage of the Genius Act, which requires stablecoin issuers to formally register and hold
dollar-for-dollar reserves. In December, the FDIC launched a framework for how banks can ap
ply to issue payment stablecoins via a subsidiary. The Comptroller of the Currency set out its own measure in February.
The “tremendous progress” in the advancement of digital assets, technological developments by financial institutions and the Trump administration’s embra
ce of the crypto industry has meant “development of stablecoin and tokenized deposit products continu
es to advance, and use cases continue to multiply,” Hill said.
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Hill and two other board members — all Republicans — are set to vote on the proposal at the me
eting. There are no Democrats on the board, which has two vacancies.
The FDIC plans to seek comment on 144 specific questions, Hill said.
“We genuinely invite robust feedback on key issues in the proposal,” Hill said. “This includes feedback on permissible and prohibited activities, capital requireme
nts for stablecoin issuers and for their parent companies, the FDIC’s approach to pass-through insurance, an
d the prohibition on yield.”
The proposal would “reaffirm by regulation that deposits in tokenized form remain deposits und
er the Federal Deposit Insurance Act,” he said.
Banks and crypto firms have clashed over digital asset regulations, including a fight over access to bank charters.
Still, the plan is likely to be cheered by industry. Crypto firms will likely see it as a step closer to legitimacy while banks pore over the details to ensure the regulators do
n’t give financial technology companies too much room to act like traditional lenders.
Some critics, including Fed Governor Michael Barr, have warned regulators to keep an eye out for potential money laundering and financial stability risks.
