Bank regulators are expected to begin proposing rules for stablecoin issuers by the end of December, the acting head of the Federal Deposit Insurance Corporation said, according to testimony Travis Hill is preparing to deliver to the House Financial Services Committee on Tuesday.
First on the regulator’s agenda to implement the Stablecoin Guidance and Establishing National Innovation in the United States (GENIUS) Act: a proposal for how the agency would handle issuers applying for federal regulation.
Hill’s prepared testimony stated: “The FDIC has begun developing rules to implement the GENIUS Act; we expect to issue a proposed rule later this month to establish our application framework, and a proposed rule early next year to implement the GENIUS Act’s prudential requirements for FDIC-regulated issuers of payment stablecoins.”
The GENIUS Act contemplates the involvement of a range of federal and state entities in the regulation of the stablecoin industry. After figuring out the application process, the Federal Deposit Insurance Corporation (FDIC), which oversees deposit insurance and oversees thousands of banks, must establish capital requirement rules for regulated banks that want to issue stablecoins. It is also responsible for liquidity standards and overseeing the quality of reserves set aside by issuers.
The federal agency that develops such a rule must develop a proposal and solicit public comment for a period of time, usually lasting several months. Once the comments have been reviewed, the regulator can issue a final version, with the new system usually taking effect for a long period of time.
Other agencies, including the Treasury Department, have also been fulfilling some of their Genius Act responsibilities.
Hill also touched on other regulatory priorities during her testimony. Hill said the FDIC is also “currently developing guidance to further clarify the regulatory status of tokenized deposits,” based on recommendations in the President’s Task Force on Digital Asset Markets report earlier this year.
Tuesday’s House hearing will also receive testimony from other bank and credit union regulators, including the Federal Reserve. Over the past few years, cryptocurrencies have been a common topic of discussion whenever financial regulators appear before congressional panels.
Michelle Bowman, the Fed’s vice chair for supervision, said in her own prepared testimony that the central bank is “developing capital, liquidity, and diversity regulations for stablecoin issuers as required by the Genius Act.”
