FDIC Releases Comprehensive 191-Page Stablecoin Regulatory Framework

Key Takeaways

• Federal regulators have voted to advance a comprehensive regulatory structure for stablecoin issuers following the GENIUS Act
• The framework addresses reserve requirements, capital thresholds, liquidity standards, and custody protocols
• Federal deposit insurance will not extend to stablecoin holdings
• The agency has launched a 60-day public feedback window with 144 specific questions for industry input
• Congressional lawmakers continue discussions on potential amendments, particularly concerning yield-generating stablecoins

The Federal Deposit Insurance Corporation has unveiled a comprehensive 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 191-page regulatory framework. The document is now available for public review and comment over the next 60 days, with regulators seeking input on 144 distinct questions.

The framework establishes operational standards for stablecoin issuers operating as subsidiaries of federally insured banking institutions. Key areas include requirements for reserve holdings, minimum capital levels, liquidity management protocols, and asset custody specifications.

FDIC Chair Travis Hill emphasized the sector’s explosive expansion. He pointed to the growing convergence between traditional banking and cryptocurrency operations, with digital asset companies pursuing banking licenses while established financial institutions explore blockchain-based products.

The GENIUS Act stipulates that stablecoins must maintain complete backing through U.S. dollar holdings or equivalent liquid instruments. The legislation also requires yearly independent audits for issuers exceeding $50 billion in market capitalization and establishes guidelines for international operations.

Regulators explicitly stated that stablecoin holdings will remain outside federal deposit insurance coverage. The proposal emphasizes that payment stablecoins lack backing from the full faith and credit of the United States government.

Interest-Bearing Products and Reward Structures

The FDIC’s proposal tackles the question of stablecoin-related returns. Issuers will be prohibited from marketing their tokens as interest-bearing or yield-generating instruments based solely on ownership or utilization. This restriction extends to arrangements facilitated through intermediaries like cryptocurrency exchanges.

Nevertheless, industry experts suggest that carefully designed reward initiatives may remain permissible within the proposed regulatory boundaries.

The framework also provides clarity on deposit insurance coverage for funds held as collateral supporting stablecoin issuance. Tokenized deposits satisfying the statutory definition would receive identical treatment to conventional deposit accounts.

This represents the second GENIUS Act implementation proposal from the FDIC. The initial release in December outlined the application procedures for prospective issuers. The Office of the Comptroller of the Currency published its corresponding framework in February, while the Treasury Department issued guidance last week addressing state-level supervision of smaller-scale issuers.

Congressional Deliberations Continue

As federal agencies advance implementation efforts, Senate lawmakers continue refining specific provisions within the GENIUS Act itself. A prolonged discussion between banking sector representatives and cryptocurrency advocates regarding yield-producing stablecoins has persisted for numerous months.

Legislators have indicated they are approaching resolution on this matter, though the legislation has not yet proceeded to committee hearings. Congressional sessions resume later this week following a recess.

The FDIC’s proposed framework will remain provisional until regulators complete their review of public submissions and draft final regulations, a timeline anticipated to extend several additional months.

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