FDIC Proposes Rule to Block Stablecoin Holders from Deposit Insurance
The Federal Deposit Insurance Corp. (FDIC) is proposing a rule that would explicitly bar stablecoin holders from receiving deposit insurance, even through third-party financial firms.
This move aligns with the intent of the GENIUS Act, which distinguishes stablecoins from bank deposits and carries up to $250,000 in federal guarantees. The proposed rule aims to close a potential loophole that would have allowed third-party firms to obtain protection on behalf of stablecoin holders.
The FDIC's proposal arrives as concern over stablecoin competition intensifies within the banking sector. A Jefferies report estimates that stablecoin growth could generate 3% to 5% core deposit runoff at U.S. banks over five years, cutting average bank earnings by roughly 3%. The sector's market cap has grown from $184 billion in 2022 to around $314 billion today.
Under the GENIUS Act, stablecoins such as Circle's USDC and Tether's USDT are explicitly distinguished from bank deposits. Tokenized deposits, bank deposits represented as programmable blockchain tokens, should receive the same insurance treatment as conventional deposits, according to the FDIC's preliminary view.