American Regulators Hve Concluded That Stablecoins Are Not Like Bank Deposits

This includes so-called “pass-through” arrangements that have allowed some issuers to claim their customers were individually covered up to $250,000.

The proposal, unveiled at the American Bankers Association Washington Summit, closes a regulatory gap that the agency says has been quietly expanding as stablecoin adoption grows. Under the new rule, stablecoins would not qualify for FDIC insurance even when the underlying reserves sit at a federally insured bank. Issuers and related parties would also be banned from marketing their tokens as federally insured or government-backed in any way.

There is one exception – tokenized deposits. Hill was explicit that a deposit is a deposit, regardless of the technology behind it. Digital versions of traditional bank deposits, issued by FDIC-insured institutions, will retain full insurance eligibility. That distinction is not incidental — it effectively hands traditional banks a structural advantage over non-bank stablecoin issuers.

About the GENIUS Act

The FDIC’s proposal does not exist in a vacuum. It flows directly from the Guiding and Establishing National Innovation for U.S. Stablecoins Act — the GENIUS Act — signed into law in July 2025. That legislation was the first comprehensive federal framework for stablecoins in the U.S., and it set the rules that the FDIC is now enforcing.

The law’s mechanics are straightforward: every stablecoin must be backed 1-to-1 with high-quality liquid assets, such as U.S. Treasuries or cash. Issuers need a federal license from the Office of the Comptroller of the Currency or an approved state-level equivalent. Monthly independent audits and public reserve disclosures are mandatory.

What the GENIUS Act does not allow is any form of government safety net. It explicitly prohibits bailouts, and the FDIC’s new proposal is the regulatory translation of that prohibition — specifically targeting the pass-through insurance arrangements the law never directly addressed but clearly intended to block.

The Act also bans stablecoin issuers from paying interest to token holders, a provision designed to prevent stablecoins from functioning as deposit substitutes and draining liquidity from the traditional banking system.

The compliance divide is already showing up in the market. Circle has been positioning USDC as the institutional-grade, onshore-compliant option — pursuing a federal trust charter and publishing monthly reserve attestations. Tether took a different route: in January 2026, it launched USA₮, a new token issued by Anchorage Digital Bank and supervised by the OCC, built specifically to meet GENIUS Act requirements. USDT remains active for international and DeFi markets, though it still faces questions over its reserve disclosures and audit practices that could eventually create friction on U.S. exchanges.

The contrast between stablecoins and tokenized deposits under the new rules is stark. Stablecoins like USDC and USA₮ carry no FDIC coverage, are issued by permitted non-bank entities, and cannot pay yield. Tokenized deposits, by contrast, are insured up to $250,000, must be issued by FDIC-insured banks, and can pay standard interest. Both require 1-to-1 reserve backing, but only one carries the government safety net.

What’s Next

The FDIC will open a formal public comment period on the proposal. Industry stakeholders — particularly fintech firms and stablecoin issuers that have relied on pass-through insurance claims — are expected to push back. The outcome of that process will shape how the rule is finalized.

Beyond insurance, additional rulemaking is expected in the coming months. Both the FDIC and the Federal Reserve are preparing further guidance on capital requirements, liquidity standards, and risk management obligations for stablecoin issuers operating under the GENIUS Act framework.

The practical effect of the proposal, if finalized, is that stablecoin issuers will need to stand entirely on their own reserve infrastructure. There is no implied government backing to fall back on. For risk-averse institutional users, that may accelerate a shift toward tokenized deposits — a product that banks are already preparing to market as the regulated, insured alternative to private stablecoins.

For the broader market, the FDIC’s move signals that the regulatory window for ambiguity is closing. The GENIUS Act drew the legal boundaries. This proposal enforces them.

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