Svmuu News FDIC Chair Travis Hill stated at the American Bankers Association's Washington Summit that the FDIC plans to propose a rule clarifying that payment stablecoins regulated under the GENIUS Act are not eligible for "pass-through insurance," meaning third-party financial institutions also cannot obtain government deposit protection on behalf of users. Hill stated that this position aligns with the legislative intent of the GENIUS Act, even though the Act does not explicitly prohibit such arrangements.
Hill pointed out that current pass-through insurance rules require the identity and interests of end customers to be verifiable through regular processes, which is not a common feature of large-scale stablecoin arrangements. Although stablecoins do not enjoy FDIC insurance, the GENIUS Act requires them to be fully reserved.
Furthermore, Hill also mentioned that the FDIC is considering the positioning of tokenized deposits, suggesting that regardless of the technology or accounting method used, tokenized deposits should be treated as deposits and receive the same regulatory and deposit insurance treatment as non-tokenized deposits.
White House Crypto Advisor Patrick Witt continued to defend the CLARITY Act on platform X, stating that attempts to turn it into an anti-competitive bill are undesirable. Analysts at Jefferies pointed out this week that the growth of stablecoins could lead to a 3% to 5% loss in banks' core deposits over the next five years.