FDIC Proposes Rule Blocking Pass-Through Insurance for Stablecoin Holders
The Federal Deposit Insurance Corporation (FDIC) is proposing a rule that would explicitly bar stablecoin holders from receiving 'pass-through' insurance, closing a potential loophole in the GENIUS Act. The proposed rule aims to shut down any attempts by third-party financial firms to obtain FDIC protection on behalf of stablecoin holders.
The GENIUS Act already distinguishes stablecoins, such as Circle's USDC and Tether's USDT, from bank deposits, which carry up to $250,000 in federal guarantees. The act was silent on whether third-party firms could obtain pass-through insurance for stablecoin holders, but the FDIC's proposed rule would close that door.
According to FDIC Chairman Travis Hill, the prohibition on pass-through insurance aligns with the intent of the GENIUS Act. He noted that current pass-through rules require end-customer identities to be readily ascertainable, a standard not commonly met by large stablecoin arrangements today.