FDIC Proposes to Regulate Stablecoin Issuers in the US Under the GENIUS Enactment

The Federal Deposit Insurance Corporation in the US has proposed a new regulation where they want to enact a new set of rules that will control Stablecoin Issuing to investors, and is in line with the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. This law requires stablecoins to be fully backed by US dollars or similar liquid assets. In simple terms, every stablecoin must be backed 1:1 with real assets. If there are $1 billion worth of stablecoins in circulation, the issuer must hold $1 billion in actual reserves without any exceptions. This law will also set reserve, redemption, capital, risk management, and custody standards for stablecoin issuers and insured depository institutions under its supervision.

New Framework Seeks to Bring Clarity to Stablecoin Regulation

The legislation mandates annual audits for issuers with a market capitalisation of more than $50 billion and establish guidelines for foreign issuance. The FDIC plays a key role in maintaining stability in the US financial system, as it is an organisation that supervises more than 4,000 financial institutions and 2,700 banks. The GENIUS Act grants the FDIC the authority to oversee stablecoin issuance and activities when it was signed into law in July. Even though the act is scheduled to come into effect from January 18 onwards. 

As traditional finance gets into crypto and crypto companies look for bank charters, Travis Hill, the head of the FDIC, pointed out that the sector has grown noticeably in the last few years.  

"Over the past two years, we've seen tremendous progress in this area, including a rapid shift in the posture of the federal government; enactment of the GENIUS Act, which establishes a framework for the regulation of payment stablecoins; and substantial technological development by both banks and nonbanks," Hill further added that "as a result, development of stablecoin and tokenized deposit products continues to advance, and use cases continue to multiply." 

In February 2025, the FDIC again took matters in its own hands. Hill released several documents related to the supervision of crypto-related activities in the country. He further announced that the agency will review its previous approach towards US banks seeking to offer crypto services. During the US Senate hearing, Hill presented a 790-page document featuring letters from the US banking sector, urging the regulator to ease restrictions on experimentation with crypto-related activities and services.

Overall, at the moment, stablecoins operate in a gray area. Before this law, no clear rules mean no trust from institutions, regulators, and no certainty for users. These rules certainly change that. Stablecoins that are regulated, backed by real reserves, are often compared to money stored in a bank, in terms of safety. This could also open the door for banks, pension funds, and large institutions to use stablecoins with reduced legal risk.