FDIC Cracks Down on Stablecoin Loopholes
The Federal Deposit Insurance Corp. (FDIC) is taking steps to close a potential loophole in the GENIUS Act, which explicitly bars stablecoin holders from receiving deposit insurance directly. However, the act was silent on whether third-party financial firms could obtain that protection on holders' behalf.
According to FDIC Chairman Travis Hill, the proposed rule would shut this 'back door' and align with the intent of the GENIUS Act, which distinguishes stablecoins from bank deposits. Hill noted that current pass-through rules require end-customer identities to be readily ascertainable - a standard not commonly met by large stablecoin arrangements.
The proposal also includes guidance on tokenized deposits - bank deposits represented as programmable blockchain tokens. The FDIC's preliminary view is that these should receive the same insurance treatment as conventional deposits, as specified in the GENIUS Act.