The Deposit Insurance Corporation, which oversees the US banking industry, has officially announced its approach to stablecoin regulations. The agency’s proposal is among federal financial regulators carrying out certain responsibilities under the National U.S. Stablecoin Innovation Act (GENIUS), which became law last year. The draft outlines a framework close to the proposal submitted by sister regulator the Office of the Comptroller of the Currency in February.
Outline of the new regulatory proposal
Within the scope of the prepared regulations, the Deposit Insurance Institution will supervise the issuance of stablecoins by deposit institutions operating in the USA through their subsidiaries. In this context, it is planned to impose minimum capital, liquidity and custody standards on relevant companies. The institution stated that these criteria have not been finalized yet and that they will continue to collect the opinions of the public and the industry. In order to make the final decision, the 144-item question list will be kept open to public evaluation for the next 60 days.
This second regulation, prepared following the proposal regarding the implementation process announced in December, focuses on what criteria banks issuing stablecoins must meet. Until the regulations are finalized, final conditions may change.
Main discussion topics and political process in the sector
It was made clear that existing deposit insurance coverage for stablecoins would not apply. In other words, it will not be possible to benefit from the deposit guarantee granted to the bank for accounts opened for crypto assets. However, it is planned that existing regulations will apply to tokens issued by banks for payment purposes and that meet the definition of legal deposit.
Reward programs, which were featured in the Comptroller’s Office’s previous proposal, remained on the industry’s agenda. It is being discussed whether such programs can be based on collaborations with third parties and the consequences of the claim of providing interest-like returns. The Deposit Insurance Institution also pointed out that institutions issuing stablecoins cannot claim that “only holding or using stablecoins provides returns.” According to internal evaluations, rewards programs that are appropriately tailored will not violate the law.
Another topic highlighted by the institution was the capital size that issuers should maintain for risk management purposes of their business model. Additionally, in addition to the capital requirement, a “separate operational assurance based on operating expenses” requirement is on the agenda.
The Digital Asset Market Transparency Act, which is on the agenda in the Senate, foresees some changes in the legal framework regarding stablecoins. Interest groups in the banking sector and the cryptocurrency market have been engaged in discussions for months over regulations, especially on returnable stablecoins. Although congress members said that a compromise was close, it was shared that the necessary vote has not been taken yet.
The US Treasury, the Office of the Comptroller of the Currency and other institutions that supervise the markets, which are responsible for the preparation of the rules, can create the regulations as desired due to the majority of Republican appointments. It has been observed that, as a result of the White House not appointing a Democratic manager to the institutions recently, reservations are less likely to come to the fore in the relevant regulatory processes.
Despite all these developments, it is known that the GENIUS Act received strong support from both the Republican and Democratic wings during its passage through Congress.
