The FDIC has issued a proposed rule in connection with the GENIUS Act, outlining the process for banks under its supervision to apply for the issuance of payment stablecoins.
This proposal establishes a structured framework for potential bank-issued stablecoins, affecting future regulatory actions related to U.S. financial institutions and digital currencies.
The FDIC issued a notice of proposed rulemaking under the GENIUS Act, focusing on bank-issued stablecoins.
This proposal requires banks to apply through ring-fenced subsidiaries for issuing stablecoins within the U.S, with support from Acting FDIC Chairman Travis Hill.
Travis Hill Backs Bank-Issued Stablecoin Proposal
The FDIC issued a notice of proposed rulemaking under the GENIUS Act, focusing on bank-issued stablecoins. This framework requires banks to apply through ring-fenced subsidiaries for issuing stablecoins within the U.S.
Key figures like Acting FDIC Chairman Travis Hill support this proposal, which affects FDIC-supervised banks. The framework establishes procedures for FDIC-supervised institutions aiming to issue payment stablecoins, marking the agency’s initial action to implement the statute. Hill stated, “The GENIUS Act allows insured depository institutions to issue payment stablecoins through a subsidiary and to engage in certain related activities.”
New Rules to Hit Stablecoin Markets
The proposed rule could reshape the issuance of stablecoins by placing them under banking regulations. However, current market dynamics and blockchain activities remain unchanged until these new regulatory measures are finalized and put into practice.
This NPR does not specify immediate capital flows into crypto markets. It sets a framework for banks choosing to issue stablecoins, potentially moving U.S. policy toward federally supervised bank-issued stablecoins, affecting USD liquidity and DeFi protocols.
FDIC Moves Forward with GENIUS Act Statute
The GENIUS Act parallels past efforts to integrate stablecoins into U.S. banking, similar to the President’s Working Group’s 2021 recommendations. This move formalizes regulations that were previously ad-hoc, akin to past OCC interpretive letters.
Experts anticipate the rule will encourage a shift toward bank- regulated stablecoins, impacting the market structure. As the FDIC and other primary Federal regulators will oversee this sector, historical trends indicate an emphasis on financial safety and compliance.
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