FDIC Moves to Clarify Stablecoin Holders Would Not Receive Deposit Insurance

The U.S. Federal Deposit Insurance Corporation (FDIC) on June 9, cited by PYMNTS, invited public feedback on proposed rules to implement the GENIUS Act. The draft would make explicit that payment stablecoins are not deposit accounts and that stablecoin holders would not be covered by FDIC deposit insurance. Under the proposal, stablecoin reserve assets placed at banks would be treated as the stablecoin issuer's corporate deposits and insured on that basis, rather than providing passthrough insurance to end users. The FDIC said this approach aligns with the GENIUS Act's requirement that payment stablecoins are not protected by FDIC deposit insurance. Stakeholders also raised topics including stablecoin interoperability, reporting standards, user incentive structures, and rules for reserve custody and redemption. Some banks urged regulators to prohibit stablecoin issuers from using interest, cashback, or rewards to attract funds, arguing such incentives could accelerate deposit migration from banks into stablecoin systems. The FDIC's proposal would also require issuers to hold highly liquid reserve assets, cap the share of reserves kept at any single financial institution at 40%, and tighten requirements around asset segregation, custody controls, and redemption management.