FDIC Seeks to Shut Stablecoin Loophole in GENIUS Act Implementation

The Federal Deposit Insurance Corp. (FDIC) will propose a rule to explicitly bar stablecoin holders from receiving deposit insurance through a 'pass-through' arrangement, even if intermediaries try to obtain that protection on their behalf.

FDIC Chairman Travis Hill made this announcement at an American Bankers Association summit in Washington, as federal agencies continue implementing rules for the GENIUS Act. The act distinguishes stablecoins from bank deposits, which carry up to $250,000 in federal guarantees.

Hill stated that the proposed rule aligns with the intent of the statute, even though it does not explicitly address this arrangement. He noted that current pass-through rules require end-customer identities to be readily ascertainable, a standard often not met by large stablecoin arrangements.

The FDIC's preliminary view is that tokenized deposits, bank deposits represented as programmable blockchain tokens, should receive the same insurance treatment as conventional deposits.