- FDIC will release draft stablecoin oversight rules under the GENIUS Act this month.
- New standards will cover capital, liquidity, and reserve management for issuers.
- Regulators are coordinating on a unified US stablecoin supervisory framework.
The Federal Deposit Insurance Corporation is in the process of releasing its initial draft of FDIC stablecoin regulations under the GENIUS Act that will be issued before the month is over. The release of the proposal by the acting chairman, Travis Hill, confirmed that it will address how stablecoin issuers can seek federal oversight, a major change in the way the United States regulates payment stablecoins. The new framework is expected to clarify supervisory processes and set the same expectations for firms under the new law.
The draft proposal will be the first step to a gradual rollout of the regulations, said Hill. He mentioned that the FDIC will present a second proposal at the beginning of next year, which will address capital, liquidity, and reserve management requirements. The standards are designed to ensure that stablecoin issuers have sufficient financial buffers to accommodate redemption requests during market stress events. The Genius Act puts the FDIC in charge of the bank-linked stablecoin issue, and thus, this rulemaking process is critical to implementing the law.
FDIC stablecoin rules aim to establish clear oversight standards
The GENIUS Act, passed earlier this year, established a multi-agency framework for overseeing dollar-backed stablecoins. The FDIC regulates stablecoin issues of institutions already under its control under the legislation. Hill mentioned that the agency’s work is not confined to the application process; creating prudential standards is necessary to align digital asset operations with conventional bank protections.
After the release, the proposed rules will go through a several-month-long public comment period. The regulators will take industry responses into account and amend the proposal before finalizing the framework. The FDIC anticipates a slow transition to implement the new requirements, as issuers should have time to coordinate their operations with them.
Regulators coordinate to shape the GENIUS Act stablecoin framework
The wider rulemaking initiative involves various agencies. The Treasury Department has just completed the second consultation on regulating the non-bank stablecoins, paving the way for a similar regulatory evolution. The Federal Reserve is developing capital, liquidity, and diversification standards as mandated by the law. Vice Chair Michelle Bowman also highlighted the need to be clear about what banks are allowed to do with digital assets. noting that supervisors were expected to give consistent consideration as the pace of innovation increased.
The OCC and the National Credit Union Administration will also be present with the FDIC and the Federal Reserve in future presentations, which can be attributed to the FDIC developing tokenized deposit guidance alongside rulemaking and the range of responsibilities within the new stablecoin regulation. Another initiative by the CFTC is the introduction of a system that allows tokenized collateral in derivatives markets, such as stablecoins.
FDIC develops tokenized deposit guidance alongside rulemaking
In addition to the stablecoin framework, the FDIC is developing a guideline regarding tokenized deposits. Hill added that the effort is in line with the President’s Working Group’s recommendations, which called for more explicit expectations for blockchain-based banking products. The guidance will shed light on how tokenized deposits can be implemented within current requirements for obligations and risk management.
