FDIC to Propose Rule Barring Stablecoin Holders from Pass-Through Insurance
The Federal Deposit Insurance Corp. (FDIC) is set to propose a rule that would explicitly bar stablecoin holders from obtaining 'pass-through' insurance, effectively closing a potential loophole in the GENIUS Act. The act already bans direct FDIC coverage for stablecoins, but was silent on whether third-party financial firms could obtain that protection on holders' behalf.
According to FDIC Chairman Travis Hill, the proposed rule aligns with the intent of the GENIUS Act, which distinguishes stablecoins from bank deposits. The current pass-through rules require end-customer identities to be readily ascertainable - a standard not commonly met by large stablecoin arrangements today.
The proposed rule also addresses tokenized deposits, or bank deposits represented as programmable blockchain tokens, which the GENIUS Act does not cover. Hill's preliminary view is that these tokenized deposits should receive the same insurance treatment as conventional deposits.