USBC: Says proposed rules will provide certainty for insured depository institutions

The Federal Deposit Insurance Corporation (FDIC) has proposed a rule that would significantly revise its regulations on brokered deposits, aiming to provide greater clarity for insured depository institutions and third-party partners. The proposed changes would roll back many of the 2020 revisions to the FDIC’s brokered deposit rules, narrowing exceptions and redefining what constitutes a deposit broker. For example, a third party that receives compensation for facilitating deposits would now be considered a deposit broker unless an exception applies, and exclusivity with a single institution would no longer exempt a party from being classified as a broker.

Greg Kidd, CEO of USBC, has stated that the proposed rules will bring much-needed certainty to the financial sector, particularly for institutions engaged in innovative financial services such as digital dollar initiatives. USBC, in collaboration with Vast Bank, is actively exploring opportunities to expand digital dollar adoption in Latin America, where access to stable monetary systems is limited. The FDIC’s proposed rule, if finalized, could impact Banking as a Service (BaaS) arrangements by requiring banks to restructure their partnerships or treat deposits as brokered, which could affect liquidity and funding strategies.

The FDIC has opened a 60-day comment period following the rule’s publication in the Federal Register. Financial institutions and stakeholders are encouraged to review the proposed changes and provide feedback to ensure aligns with evolving needs of the banking and fintech sectors.