FDIC Introduces New Capital and Liquidity Proposal for Stablecoin Issuers

Executive Summary

• The FDIC has introduced a regulatory framework for stablecoin issuers as mandated by the GENIUS Act.
• The proposed guidelines establish requirements for liquidity, capital reserves, and asset custody.
• Stablecoins are explicitly excluded from the deposit insurance protections afforded to standard bank accounts.
• Issuers are required to hold capital to mitigate risk and maintain an operational reserve calculated from prior annual expenses.
• The regulations prohibit stablecoins from generating interest or yield solely through ownership.
• The FDIC has initiated a 60-day window for public commentary before the rules are formally adopted.

(SeaPRwire) –   The Federal Deposit Insurance Corporation (FDIC) has unveiled a new regulatory proposal for stablecoin issuers, aiming to harmonize its oversight with the framework established by the Office of the Comptroller of the Currency (OCC). These measures are being implemented as part of the 2022 Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.

The FDIC’s strategy emphasizes strict standards for capital, liquidity, and custody for depository institutions involved in stablecoin issuance. Building upon an OCC proposal from February, the new rules also clarify the status of pass-through insurance and the legality of interest-bearing stablecoin products.

FDIC Establishes New Regulatory Benchmarks for Stablecoin Issuers

The FDIC’s latest initiative sets forth comprehensive standards for stablecoin issuers. It mandates specific capital requirements to ensure that issuers possess adequate resources to navigate business-related risks. Furthermore, issuers must establish an operational buffer derived from their previous year’s operating costs.

The proposal clarifies that stablecoins do not qualify for the deposit insurance coverage provided to traditional bank accounts, distinguishing them from standard consumer deposits. This stance aligns with the OCC’s earlier framework while providing additional regulatory detail.

Although the rules are in their preliminary phase, the FDIC is actively soliciting input from industry participants. A 60-day public comment period has been opened to allow crypto policy experts and issuers to weigh in. The agency intends to finalize the regulations following a review of these submissions, a process expected to span several months.

Regulatory Stance on Tokenized Deposits and Yield Mechanisms

The FDIC also clarified its position on tokenized deposits, suggesting that if these assets meet the legal definition of a “deposit,” they should be treated identically to traditional deposits. This classification could allow tokenized assets to qualify for pass-through insurance, offering issuers greater operational flexibility.

A significant component of the proposal is the ban on yield-bearing stablecoins. The FDIC stated that issuers are prohibited from providing interest or returns simply for holding or utilizing a payment stablecoin. The agency further noted that any third-party rewards programs associated with stablecoins must be meticulously designed to ensure compliance with these regulations.

In coordination with the Treasury Department and other market regulators, the FDIC is working to finalize the implementation of the GENIUS Act. These proposals are expected to play a pivotal role in defining the future regulatory landscape for stablecoins in the U.S.