FDIC Says Stablecoin Holders Aren’t Covered by Deposit Insurance

The Federal Deposit Insurance Corp. said stablecoin holders are not protected by deposit insurance, underscoring a push to draw a clear distinction between stablecoins and bank deposits ahead of rules to implement the GENIUS Act.

PYMNTS reported on June 9 that the FDIC, in a draft rule for supervised payment stablecoin issuers and deposit-taking institutions, explicitly stated that stablecoins themselves are not insured deposits.

The agency said stablecoin reserve assets deposited at a bank would be treated as corporate deposits belonging to the issuer. While deposit insurance could apply to those corporate deposits, the coverage would not pass through directly to individual stablecoin holders.

The FDIC said that interpretation is consistent with the intent of the GENIUS Act. The law specifies that payment stablecoins are not covered by FDIC deposit insurance, and treating holders as depositors could create confusion about the nature of the product.

Debate is also continuing over whether stablecoins should be allowed to offer yield. Some banks said compensation structures including interest, rewards and cashback could shift consumer and corporate funds out of bank deposits and into stablecoins.

Capitol Federal Savings said rules should clearly prohibit rewards across the stablecoin ecosystem. Banks view reward-bearing stablecoins as a potential drag on community-bank deposits and, by extension, local lending capacity.

Olta Andoni, executive director of the Illinois Blockchain Association, said in a separate dispute over state-level taxation that “adding a 20-basis-point tax is effectively telling companies to pack up and leave.”

Some in the industry said handling detailed rules separately could make legislative debate clearer. The Digital Sovereignty Alliance said splitting the parity bill into seven standalone drafts covering staking, mining, lending and wash sales would give lawmakers more room to address specifics instead of rushing a broad package.

Interoperability and reporting standards have also emerged as key issues. A technical committee under the International Organization for Standardization proposed that the FDIC require structured, machine-readable reporting formats and the use of Legal Entity Identifiers, or LEIs. A common reporting standard could improve information sharing among regulators and boost transparency across the stablecoin ecosystem.

The FDIC is also addressing reserve composition, redemption procedures, custody requirements and risk-management standards. The draft rule would require issuers to maintain highly liquid reserve assets and limit exposure to any single qualified financial institution to no more than 40% of reserve assets.

Custody and asset-segregation requirements were also emphasized. Issuers and custodians would need to clearly identify and protect reserve assets and customer assets, while maintaining internal controls to prevent unauthorized transfers and the commingling of assets.

PYMNTS said 42% of middle-market companies have discussed, tested or used stablecoins, but only 13% are actually using them. The figures suggest companies remain cautious about broader adoption until clearer rules and operational infrastructure are in place.

Markets are watching the FDIC’s final rule for its effect on stablecoin payments and competition with banks. Deposit-insurance treatment, limits on yield offerings and reserve-management standards stand to become the core pillars of US stablecoin regulation.