FDIC chair says no deposit insurance for stablecoins under GENIUS Act
A proposed plan by the agency would ban “pass-through insurance“ for stablecoins by third parties in addition to the FDIC not insuring deposits under the law.
Travis Hill, chair of the US Federal Deposit Insurance Corporation (FDIC), confirmed that, in his opinion, a law passed in July would not give the agency the authority to guarantee stablecoin deposits.
In remarks prepared for the American Bankers Association (ABA) Washington Summit on Wednesday, Hill said that under rules for the stablecoin payments bill, the GENIUS Act, the FDIC would not allow the government to guarantee deposits once the law was fully implemented. Similarly, stablecoin issuers would be prohibited from representing that the digital assets were FDIC insured, and a proposed plan would stop “pass-through insurance” by third parties.
“If a payment stablecoin arrangement qualified for pass-through insurance, this would mean that if a bank holding the issuer’s reserves in a deposit account failed, the FDIC would insure the deposit account based on the interests of the stablecoin holders, rather than insuring the account as a corporate deposit account eligible for only $250,000 of insurance,” said Hill.