FDIC's GENIUS Act: Taming Wild Stablecoins in Bank Deposits
Published Date: 4/10/2026
Proposed Rule
Summary
The FDIC is setting new rules for banks and companies that issue stablecoins—digital money tied to real cash—to keep things safe and clear. These rules explain how deposit insurance works for the money backing stablecoins and how tokenized deposits are handled. If you’re involved, get ready to follow these rules and share your thoughts by June 9, 2026!
Analyzed Economic Effects
9 provisions identified: 3 benefits, 6 costs, 0 mixed.
New FDIC Rules for Stablecoin Issuers
The FDIC proposes new rules that would apply to FDIC-supervised permitted payment stablecoin issuers (PPSIs) and would implement GENIUS Act requirements for reserve assets, capital, liquidity, and risk management. If finalized, FDIC-supervised PPSIs must follow these tailored regulatory requirements and standards as set out in proposed part 350 subpart A.
Deposit Insurance Not Passed Through
The proposed rule would clarify that deposits held as reserves backing a payment stablecoin would be insured to the PPSI under the FDIC's coverage rules for corporate deposits, but would not be insured to payment stablecoin holders on a pass-through basis. In short, reserve deposits would insure the PPSI's deposit claim, not individual stablecoin holders.
Limits on What PPSIs May Do
The FDIC would limit a PPSI's core activities to issuing and redeeming payment stablecoins, managing reserves related to payment stablecoins, and providing custodial or safekeeping services limited to payment stablecoins and related reserve assets or private keys. Other activities must either directly support those core activities or be approved by the FDIC.
Reserve Asset Reuse Mostly Prohibited
The FDIC would prohibit PPSIs from pledging, rehypothecating, or reusing required reserve assets except in limited cases, such as (i) satisfying margin for permitted reserve investments, (ii) standard custodial obligations, or (iii) creating liquidity via repurchase agreements for Treasury bills with a maturity of 93 days or less under specified conditions. These limits are intended to keep reserve assets liquid to meet redemptions.
Tokenized Deposits Treated as Deposits
The FDIC would clarify that the term "deposit" includes deposits in tokenized form, and that tokenized deposits recorded using distributed ledger technology are deposits (not payment stablecoins) for purposes of the FDIC rules. This clarifies how tokenized deposit liabilities are treated under deposit law.
Ban on Interest/Yield for Holding Stablecoins
The proposed rule would prohibit a PPSI from paying any form of interest or yield to the holder of a payment stablecoin solely in connection with holding, using, or retaining the stablecoin. The FDIC would also establish a rebuttable presumption covering affiliate or third-party arrangements that could effect such payments.
Significant Redemption Threshold Set
The FDIC would define a "significant redemption request" as when aggregate redemption requests exceed 10 percent of a PPSI's outstanding issuance value within a single 24-hour period. The FDIC requests comment on whether 10 percent and 24 hours are appropriate thresholds.
No Bank Credit to Buy Stablecoins
The FDIC would propose prohibiting a PPSI from providing credit to its customers to purchase payment stablecoins. The FDIC explains this prevents highly leveraged issuance where reserves might not provide intended resiliency.
Ban on Deceptive Names and Marketing
The proposed rule would prohibit PPSIs from using terms suggesting U.S. government affiliation (like "United States" or "USG") in a stablecoin name and from marketing that would lead a reasonable person to believe a stablecoin is legal tender, issued by, guaranteed, or approved by the U.S. Government. PPSIs may not imply FDIC insurance or full faith and credit backing.
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