U.S. FDIC proposes first U.S. stablecoin rule to emerge from GENIUS Act
TL;DR
The FDIC has proposed its first rule under the GENIUS Act, establishing an application process for banks to issue stablecoins via subsidiaries. The proposal includes a 120-day review window and public comment period, with more comprehensive regulations expected later.
Key Takeaways
- •The FDIC proposed its first stablecoin rule under the GENIUS Act, creating an application process for depository institutions to issue dollar-backed tokens through subsidiaries.
- •The proposal includes a 60-day public comment period, a 120-day approval window for applications, and an appeal process for rejections.
- •FDIC Acting Chairman Travis Hill indicated that more substantial rules covering capital, liquidity, and risk management requirements will follow in the coming months.
- •The GENIUS Act is the first major U.S. crypto law and designates the FDIC as the regulator for insured depository institutions issuing stablecoins.
- •The application process requires institutions to submit detailed business descriptions, financial information, and safety plans for stablecoin issuance.
What to know:
- The Federal Deposit Insurance Corp., which regulates thousands of banks in the U.S., has issued its first proposal of a rule governing the application process for issuing stablecoins.
- The proposal would affect depository institutions that want to set up subsidiaries for issuing the dollar-backed tokens.
- The Federal Deposit Insurance Corp., which regulates thousands of banks in the U.S., has issued its first proposal of a rule governing the application process for issuing stablecoins.
- The proposal would affect depository institutions that want to set up subsidiaries for issuing the dollar-backed tokens.
The U.S. Federal Deposit Insurance Corp. has rolled out the first official rule proposal stemming from the new law governing stablecoin issuers, with its board voting Tuesday to open a 60-day public comment period on its system for handling applications from its regulated banks looking to issue stablecoins from subsidiaries.
The agency — led by Acting Chairman Travis Hill, who is also President Donald Trump's nominee for the permanent seat — will gather comments and review them before it can release a final rule. The Tuesday proposal, approved by all three members of the shorthanded board, would establish the procedures for accepting applications, reviewing them under a 120-day approval window and offering an appeal process for those rejected.
"Under the proposal, the FDIC would adopt a tailored application process that would enable the FDIC to evaluate the safety and soundness of an applicant’s proposed activities based on the statutory factors while minimizing the regulatory burden on applicants," said Hill, whose nomination could be confirmed as soon as this week by the Senate.
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act was the first major crypto law approved by Congress, and it set out a complex array of regulators for companies wishing to issue stablecoins, the dollar-tied tokens vital to transactions in the digital assets sector. For insured depository institutions, the FDIC is the assigned regulator.
Hill said that another more substantial rule will emerge "in the months ahead" that will establish the FDIC's capital, liquidity, and risk management requirements for such issuers.
Under the proposed application process, interested institutions would have to submit letters describing their businesses, including financial information and their plans for running a safe and steady issuance.
Read More: U.S. Senate Rolls Toward Last Vote on Confirming Crypto Regulators at CFTC, FDIC
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