The Federal Deposit Insurance Corporation is preparing a proposal that would exclude payment stablecoins from pass-through deposit insurance, highlighting a growing regulatory divide between stablecoins and tokenised bank deposits.
FDIC Chairman Travis Hill said the agency plans to clarify that stablecoin holders should not receive FDIC insurance coverage through reserves held at insured banks, citing the framework established by the GENIUS Act.
Hill said allowing pass-through insurance for stablecoin holders would conflict with the legislation’s prohibition on marketing payment stablecoins as federally insured deposits.
“Treating stablecoin holders as the insured depositors, even on a pass-through basis, seems inconsistent with the GENIUS Act’s prohibition on payment stablecoins being ‘subject to Federal deposit insurance,’”
Hill said.
Pass-through insurance traditionally allows funds deposited at a bank by intermediaries such as fintech companies to be insured as if the individual customers had deposited them directly.
Without pass-through coverage, stablecoin reserve accounts would be treated as a single corporate deposit capped at the FDIC’s $250,000 insurance limit regardless of how many token holders exist.
Hill said tokenised deposits issued by banks would remain eligible for deposit insurance because they meet the statutory definition of a bank deposit even when recorded using blockchain technology.
The FDIC is expected to release a formal proposal for public comment in the coming months as regulators and lawmakers continue debating how stablecoins should fit into the US financial system.