FDIC Slams Door on Stablecoin Insurance Loophole
The Federal Deposit Insurance Corporation (FDIC) is proposing a rule to explicitly bar stablecoin holders from receiving deposit insurance, even indirectly through third-party financial firms. This move aligns with the intent of the GENIUS Act, which already distinguishes stablecoins from bank deposits that carry up to $250,000 in federal guarantees.
FDIC Chairman Travis Hill made these remarks at an American Bankers Association summit in Washington, where he noted that current pass-through rules require end-customer identities to be readily ascertainable. However, large stablecoin arrangements often do not meet this standard.
The proposed rule would shut the door on a potential loophole in the GENIUS Act, which did not explicitly address third-party protection for stablecoin holders. 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.