Introduction to New Stablecoin Regulations
In a significant move towards regulating digital currencies, Travis Hill, the Acting Chairman of the U.S. Federal Deposit Insurance Corporation (FDIC), revealed plans to introduce new regulatory measures for stablecoin issuers during his testimony before the House Financial Services Committee. These regulations are part of the initiative under the U.S. Stablecoin National Innovation Guidance and Establishment Act, commonly known as the GENIUS Act.
Framework for Stablecoin Providers
The forthcoming set of rules will serve as a framework for stablecoin providers seeking federal oversight, establishing a clear application process. Expected in early 2024, these regulations will include further prudential standards specifically tailored for FDIC-regulated payment stablecoins, emphasizing essential criteria such as:
- Capital adequacy
- Liquidity management
- Quality of reserve assets
Collaboration and Public Input
This initiative is supported by the collaboration between the FDIC, the Treasury department, and various other regulatory agencies as they enhance their duties in relation to the GENIUS Act. The proposed regulations will be open for public commentary prior to their formal adoption, allowing stakeholders an opportunity to provide input.
Tokenized Deposits and Ongoing Hearings
Additionally, Hill noted that the agency is crafting more detailed guidance concerning the regulatory classification of ‘tokenized deposits’, an issue brought to light by recommendations from the President’s Working Group on Financial Markets. The ongoing hearing will also feature insights from other key financial regulators, including a representative from the Federal Reserve.
Federal Reserve’s Role
Notably, Michelle Bowman, the Federal Reserve’s Vice Chair for Supervision, indicated that the Fed is actively developing its own regulatory framework for stablecoin issuers, aligning with the capital, liquidity, and risk diversification standards set by the GENIUS Act.
