FDIC proposes stablecoin application framework rule as it moves forward with GENIUS Act

The Federal Deposit Insurance Corporation is moving ahead with implementing parts of a stablecoin act passed into law this summer. 

On Tuesday, the FDIC's board of directors approved a notice of proposed rulemaking that sets out an application process for institutions to issue payment stablecoins through a subsidiary. The agency is looking for public comments on the proposed rule. 

During the board meeting, FDIC counsel Nicholas Simons said the application would need to scope out proposed activities, provide a description of the "subsidiary's ownership and control structure," and include an "engagement letter with a registered public accounting firm." 

"In sum, the proposed rule would allow the FDIC to evaluate the safety and soundness of proposed payment stablecoin activities while minimizing the regulatory burden on the applicant," Simons said. 

Over the summer, President Donald Trump signed a bill creating a federal regulatory framework for stablecoins called the Guiding and Establishing National Innovation for U.S. Stablecoins, more commonly known as the GENIUS Act. The law includes provisions such as requiring stablecoins to be fully backed by U.S. dollars or similarly liquid assets, and mandates annual audits for issuers with a market capitalization of more than $50 billion, among other guidelines for foreign and domestic issuers.

Acting FDIC Chair Travis Hill told lawmakers earlier this month that the agency planned to issue an implementation framework for the GENIUS Act in the coming weeks. On Tuesday, he also said that the agency plans to issue a proposed rule in the coming months to create capital, liquidity, and risk management requirements for approved subsidiary stablecoin issuers.