FDIC Proposes Framework for Banks to Issue Stablecoins
In a significant potential shift for the financial landscape, the Federal Deposit Insurance Corporation (FDIC) has put forth a proposal that would allow American banks to issue stablecoins, pending regulatory approval. Under this new framework, banks could establish subsidiaries dedicated to creating these digital currencies, but they would first need to pass scrutiny from regulatory authorities. Before this plan can be finalized, it will undergo a public comment period to gather stakeholder input.
Regulatory Oversight and Stability
FDIC Acting Chair Travis Hill emphasized that the agency’s priority is ensuring the stability and safety of financial institutions, indicating that each stablecoin issuance application would be meticulously reviewed to evaluate associated risks.
Recent Legislative Developments
This proposal surfaces at a crucial time, following recent advancements in regulatory frameworks surrounding stablecoins in the U.S. Notably, the Genius Act, signed into law by former President Donald Trump in July, mandates that stablecoin issuers formally register and maintain reserves equivalent to the currency they issue. With this legislation now in effect, the focus has shifted from legislative actions to the regulatory measures needed for enforcement.
Requirements for Issuing Stablecoins
The FDIC stipulates that bank subsidiaries wishing to issue stablecoins must fulfill monthly reserve requirements and publicly disclose information about these reserves. In addition to this, the agency plans to examine the capital and liquidity standards of these issuers, as well as assessing operational and technological risks. The proposal also includes rigorous background checks on senior management to ensure they do not have a history of financial misconduct.
Future Regulatory Strategies
Looking ahead, Hill remarked that this framework is merely the initial phase of a broader regulatory strategy. Authorities anticipate rolling out additional proposals in 2026 aimed at expanding requirements for certain stablecoin issuers. This could redefine the way digital currencies are integrated into the existing financial system, offering enhanced oversight and consumer protection.
