Regulatory Developments on Stablecoin Implementation
The US Federal Deposit Insurance Corporation (FDIC) is set to propose a framework for implementing US stablecoin laws by the end of this month, according to its acting chair, Travis Hill. Hill indicated in prepared testimony for the House Financial Services Committee that the agency has commenced work on promulgating rules for the GENIUS Act and anticipates issuing a proposed rule to establish its application framework.
Furthermore, Hill stated that the FDIC plans to release a proposed rule to implement the prudential requirements of the GENIUS Act for FDIC-supervised payment stablecoin issuers early next year.
The GENIUS Act, signed into law by President Donald Trump in July, established oversight and licensing regimes involving multiple regulators. Under this act, the FDIC is tasked with overseeing the stablecoin-issuing subsidiaries of institutions it supervises. The FDIC, which insures deposits in numerous banks in case of failure, will also be responsible for setting capital requirements, liquidity standards, and reserve asset diversification standards for stablecoin issuers, as outlined by Hill.
Federal agencies typically follow a process of publishing proposed rules for public feedback. They then review and respond to this input before issuing a final version, a procedure that can span several months.
The Treasury Department, which will also regulate certain stablecoin issuers, including non-banks, began its implementation of the GENIUS Act in August. The department concluded a second period of public comment on its implementation proposal last month.
FDIC's Work on Tokenized Deposit Guidelines
In his remarks, Travis Hill mentioned that the FDIC has also taken into consideration recommendations published in July by the President’s Working Group on Digital Asset Markets. The report suggested clarifying or expanding permissible activities for banks, including the tokenization of assets and liabilities.
The FDIC is currently developing guidance to offer further clarity regarding the regulatory status of tokenized deposits.
Federal Reserve's Role in Stablecoin Rule Development
Michelle Bowman, the Federal Reserve's vice supervision chair, is also scheduled to testify, stating that the central bank is actively collaborating with other banking regulators to develop capital, liquidity, and diversification regulations for stablecoin issuers as mandated by the GENIUS Act.
Bowman emphasized the need for clarity in the treatment of digital assets to ensure the banking system is adequately positioned to support digital asset activities. This includes defining permissible activities and providing regulatory feedback on proposed new use cases.
The hearing on Tuesday, hosted by the House Finance Committee, will also feature remarks from the heads of the Office of the Comptroller of the Currency and the National Credit Union Administration, both of which will play a role in implementing stablecoin rules.