FDIC to Unveil Stablecoin Framework This Month

The Federal Deposit Insurance Corporation (FDIC) is set to release its proposed framework for stablecoins by the end of this month. This initiative aims to establish a comprehensive structure for the supervision and regulation of stablecoin issuers.

Key Takeaways

The FDIC is expected to publish a stablecoin framework by the end of this month, with prudential requirements to follow early next year.
New regulations will include capital requirements, liquidity standards, and rules for asset diversification for stablecoin issuers.
The implementation of these changes comes after the GENIUS Act, signed by President Trump, which set the stage for regulatory oversight in the digital currency sector.
The Treasury Department is also working on regulations for non-bank stablecoin issuers, having recently completed a public comment period.
The FDIC's preparedness to provide guidance on tokenized deposits aligns with recommendations from the President's Working Group on Digital Asset Markets.

Implementation Timeline and Regulatory Overview

Hill confirmed that the FDIC anticipates rolling out its proposed framework for stablecoin applications by the end of this month, followed by a set of prudential requirements anticipated for early next year. His testimony highlighted that the agency plans to implement capital requirements, establish liquidity standards, and introduce diversification rules for reserve assets for stablecoin issuers under its jurisdiction.

In July, President Donald Trump enacted the GENIUS Act, which among other provisions, initiated regulatory oversight for several federal agencies in the digital currency realm. Consequently, the FDIC will be responsible for safeguarding the stablecoin-issuing subsidiaries of institutions already under its watch. This marks a shift beyond its traditional role of providing bank deposit insurance.

It's common practice for federal agencies to propose regulations, allowing for public feedback before finalization. This process can be quite lengthy, often spanning several months.

Additionally, the Treasury Department, responsible for overseeing non-bank stablecoin issuers, began implementing the GENIUS Act in August and has just completed its second public comment round. Hill also indicated that the FDIC is preparing guidance on tokenized deposits, responding to the recommendations put forth by the President's Working Group on Digital Asset Markets.

Federal Reserve Vice Chair Michelle Bowman stated that the central bank is collaborating with banking regulators to frame stablecoin regulations that comply with federal law.

As the hearing progresses, we will hear from the leadership of the Office of the Comptroller of the Currency and the National Credit Union Administration. Both agencies will play crucial roles in enforcing stringent stablecoin oversight across the financial system, thereby ensuring consistent regulatory standards for digital asset activities nationwide.

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