On March 12, FDIC Chairman Travis Hill stated at the American Bankers Association Summit in Washington that the FDIC plans to propose a rule explicitly stating that payment-type stablecoins bound by the GENIUS Act do not qualify for "transfer insurance," meaning that third-party financial institutions are also prohibited from obtaining government deposit protection on behalf of users. This position aligns with the legislative intent of the GENIUS Act, although the act does not explicitly prohibit such arrangements.
Hill points out that current transitive insurance rules require end-customer identity and rights to be confirmed through routine procedures, which is not a common feature of large stablecoin arrangements. Although stablecoins are not FDIC insured, the GENIUS Act requires them to be fully insured. Furthermore, Hill states 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 enjoy the same regulatory and deposit insurance treatment as non-tokenized deposits.
