FDIC's Stablecoin Rules: Balancing Innovation and Financial Stability

The U.S. Federal Deposit Insurance Corporation (FDIC) is set to publish its first comprehensive regulatory framework for stablecoin issuance under the GENIUS Act this month, marking a pivotal step in the federal oversight of digital assets. Acting FDIC Chair Travis Hill confirmed the agency's plans in prepared testimony for a House Financial Services Committee hearing, stating that a proposed rule outlining the application process for stablecoin issuers will be released before year-end. This framework will establish capital, liquidity, and reserve asset diversification requirements for stablecoin-issuing subsidiaries of banks under FDIC supervision, as mandated by the July 2024 law signed by President Donald Trump [according to reports](https://finance.yahoo.com/news/fdic-implement-us-stablecoin-rule-074421888.html).

The GENIUS Act, short for the Guiding and Establishing National Innovation for U.S. Stablecoins Act, reconfigures regulatory authority by designating the FDIC as the primary overseer for bank-issued stablecoins while other agencies, including the Federal Reserve and Office of the Comptroller of the Currency, manage non-bank entities. Hill emphasized that the FDIC's role extends beyond administrative tasks, requiring it to define prudential standards to ensure stablecoin issuers can withstand market stress. [A second rule addressing these standards](https://cointelegraph.com/news/fdic-genius-act-framework-coming-this-month) is slated for early 2026.

The FDIC's proposed framework aligns with broader federal efforts to clarify the legal and operational boundaries of stablecoins. Alongside the application rules, the agency is developing guidance on tokenized deposits-digital representations of traditional bank deposits-following recommendations from the President's Working Group on Digital Asset Markets. This initiative aims to integrate blockchain-based innovations into the existing banking framework while [mitigating risks such as liquidity crises](https://www.theblock.co/post/381008/us-fdic-implement-genius-act) or asset mismanagement.

Collaboration with other regulators is critical. Federal Reserve Vice Chair for Supervision Michelle Bowman highlighted the central bank's work on capital and liquidity standards for stablecoin issuers, underscoring the need for a unified approach to anchor the sector to traditional financial systems. [The Treasury Department has also advanced its oversight role](https://crypto.news/us-fdic-set-to-unveil-its-first-genius-act-stablecoin-guidelines-this-month/), concluding a second public consultation on non-bank stablecoin regulation in November.

Public input will shape the final rules. As with most federal regulatory proposals, the FDIC will solicit feedback through a public comment period, a process that often extends for months. This iterative approach allows stakeholders, including banks, fintech firms, and consumer advocates, to influence the final framework. The FDIC's action this month signals a shift from legislative drafting to concrete implementation, with potential implications for market stability and innovation in digital payments.