Travis Hill, chair of the Federal Deposit Insurance Corporation, said a newly passed US stablecoin law would not give the agency authority to insure deposits tied to stablecoins. His comments were prepared for remarks at the American Bankers Association Washington Summit.
According to Hill, the stablecoin payments legislation known as the GENIUS Act does not allow the FDIC to guarantee stablecoin deposits once the framework is fully implemented. Stablecoin issuers would also be prohibited from claiming that their digital assets are insured by the FDIC.
Proposed Ban on Pass-Through Insurance for Stablecoins
Hill explained that regulators are also considering rules that would prevent “pass-through insurance” for stablecoin arrangements. Under such a structure, deposits held by banks on behalf of stablecoin issuers could potentially be insured based on the interests of token holders.
However, the proposed approach would instead treat those funds as corporate deposit accounts. This means they would only qualify for the standard FDIC insurance limit of $250,000 rather than coverage tied to the number of stablecoin holders.
Stablecoin Regulation and Reserve Requirements
The GENIUS Act, signed into law by Donald Trump in July, established a regulatory framework for payment stablecoins in the United States. The law will be implemented 18 months after signing or within 120 days after regulatory agencies finalize related rules.
While stablecoin holders may not receive FDIC protection, issuers will still be required to fully back their dollar-pegged tokens with reserves.
Disclaimer
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