FDIC Kicks Off GENIUS Act: US Regulators Unveil Stablecoin Framework

In a significant move towards establishing a robust regulatory landscape for digital assets, the U.S. Federal Deposit Insurance Corporation (FDIC) is poised to introduce its initial rule proposals for stablecoin issuers by the end of December. This action, announced by Acting Chairman Travis Hill, officially marks the commencement of the legislative implementation process for the pivotal “GENIUS Act” (Generating Innovative New Ideas for the United States Act), a bill designed to bring comprehensive oversight to stablecoins.

FDIC’s Phased Approach to Stablecoin Oversight

During his testimony before the House Financial Services Committee, Travis Hill detailed the FDIC’s phased strategy. The agency will first unveil an application framework this month for stablecoin issuers seeking federal regulation. Following this, a second set of draft rules, delving into more granular requirements such as capital mandates, liquidity standards, and the quality of reserve assets, is anticipated early next year.

“The FDIC has begun the process of developing rules to implement the GENIUS Act,” Hill stated in his prepared remarks. “We expect to issue a proposed rule for the application process later this month, and prudential requirements for payment stablecoin issuers under FDIC supervision will be announced early next year.”

Understanding the GENIUS Act Framework

The GENIUS Act establishes a collaborative regulatory structure, with oversight responsibilities shared between federal and state agencies. A core function of the FDIC under this act will be to define stringent capital requirements and liquidity standards for banks intending to issue stablecoins. Furthermore, the agency will play a critical role in supervising the quality of these stablecoins’ underlying reserve assets, ensuring they meet prescribed benchmarks.

A Collaborative Regulatory Effort Across Agencies

The implementation of these new regulations will follow standard U.S. administrative procedures, which mandate public and industry comment periods, typically lasting several months. This feedback will then be consolidated before final versions of the rules are issued, allowing the market a gradual transition period for compliance.

Beyond the FDIC, other key authorities, including the U.S. Treasury Department, are also actively developing specific rules and guidelines related to the GENIUS Act within their respective purviews, underscoring a unified governmental approach to digital asset regulation.

Clarifying Tokenized Deposits and the Fed’s Role

In his testimony, Hill also revealed that the FDIC is working to clarify the regulatory classification of “tokenized deposits,” drawing on recommendations from the President’s Working Group on Digital Asset Markets report published earlier this year. The FDIC is currently in the process of formulating relevant guidance for this evolving area.

Echoing these efforts, Michelle Bowman, Vice Chair for Supervision at the U.S. Federal Reserve (Fed), confirmed the Fed’s engagement. She stated that the Fed is collaborating with multiple departments to establish comprehensive capital, liquidity, and asset diversification requirements for stablecoin issuers, as stipulated by the GENIUS Act. This includes clarifying obligations for 1:1 USD reserves and registration mandates, further solidifying the regulatory foundation for stablecoins.