Stablecoins won't get any kind of deposit insurance under GENIUS rules, says FDIC chief

Policy Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Stablecoins won't get any kind of deposit insurance under GENIUS rules, says FDIC chief The chairman of the U.S. Federal Deposit Insurance Corp. made clear that even pass-through deposit insurance won't be allowed from third-party firms. By Jesse Hamilton | Edited by Aoyon Ashraf Mar 11, 2026, 4:08 p.m. Make us preferred on Google The chairman of the Federal Deposit Insurance Corp. clarified that stablecoins won't get deposit insurance under GENIUS Act. (Jesse Hamilton/CoinDesk) What to know : The chairman of the U.S. Federal Deposit Insurance Corp. outline a proposed rule his agency is planning to issue that he said will clarify that "pass-through" deposit insurance won't be allowed to be offered to stablecoin users. Chairman Travis Hill said that position aligns with the intent of the GENIUS Act that his and other federal financial agencies are now implementing. Stablecoin users won't benefit from any government guarantee of their money when the new U.S. law is implemented to govern these tokens, said Federal Deposit Insurance Corp. (FDIC) Chairman Travis Hill. He also specified that the ban will include protections known as "pass-through insurance" in which financial firms obtain the government protections on behalf of customers. The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act that's being implemented now by U.S. markets and banking regulators included a ban on FDIC insurance for holdings of stablecoins, the tokens such as Circle's USDC and Tether's USDT that are designed to maintain the value of a U.S. dollar. That's meant to distinguish them from bank deposits, which are guaranteed up to $250,000 by the U.S. backstop. "The FDIC is planning to propose that payment stablecoins subject to the GENIUS Act are not eligible for pass-through insurance," Hill told an audience Wednesday at an American Bankers Association summit in Washington. Though he said the GENIUS Act didn't explicitly block those relationship, Hill said such a prohibition seems to follow the intent of the law. "It is difficult to estimate the extent to which stablecoin arrangements would qualify for pass-through insurance if they were eligible," he said. "For example, current pass-through insurance rules require that the identities and interests of end-customers must be ascertainable in the regular course, which is not a common feature of large stablecoin arrangements today." While stablecoins won't get the FDIC insurance that's buttressed American's bank accounts for generations, the law mandates that they be fully reserved, so they'll be protected by the issuers' own safety net. Protecting banks Treating stablecoin holdings distinctly from bank deposits is a highly relevant arena of regulatory discussion, because the banking industry had halted progress on the crypto industry's Digital Asset Market Clarity Act over whether stablecoins could be associated with yield. Bankers have argued that such an arrangement could poison their relationship with depositors, which is at the core of that industry's business model in which deposited funds fuel lending. Jefferies analysts even said this week that the boom in stablecoin could translate into 3% to 5% core deposit runoff over the next five years from banks, eating into their profits. But White House crypto adviser Patrick Witt has maintained a drumbeat in posts on the social media platform X that the Clarity Act objections are unfounded attempts to derail an important bill. "The CLARITY Act must remain a pro-innovation piece of legislation," he said in his most recent post on Tuesday night . "Attempts to hijack the legislative process and turn it into an anti-competition bill are shameful." Hill addressed the argument that customers may move their money out of banks and into stablecoins to chase higher rewards, contending that "a customer moving funds from a bank account into a stablecoin generally does not remove the funds from the aggregate banking system, but this would have impacts on the nature and distribution of deposits across the system." The FDIC chief also said his agency is weighing another position that the GENIUS Act didn't address: tokenized deposits. Those are bank deposits represented as a programmable token on a blockchain. He suggested that such deposits probably need to be considered as deposits under the law, "regardless of the technology or recordkeeping utilized, and thus tokenized deposits should be eligible for the same regulatory and deposit insurance treatment as non-tokenized deposits." Read More: U.S. FDIC proposes first U.S. stablecoin rule to emerge from GENIUS Act U.S. Federal Deposit Insurance Corp. Stablecoins crypto legislation Regulations More For You Pudgy Penguins: Challenging the Pokemon and Disney Legacy in the Global IP Race By CoinDesk Research Feb 27, 2026 Commissioned by Pudgy Penguins CoinDesk Research looks into how Pudgy Penguins disrupts traditional toys market via a phygital model. With 2M+ units sold, they scale via global partnerships and events. What to know : Disrupting a Stagnant Market : Pudgy Penguins is utilizing a "Negative CAC" model to challenge the traditional $31.7B licensed toy industry by treating physical merchandise as a profitable user acquisition tool rather than just a final product. View Full Report More For You Ghana opens crypto trading sandbox with 11 firms under new VASP law By Francisco Rodrigues | Edited by Sheldon Reback 2 hours ago The companies will be able to run their products in a controlled environment while regulators monitor risks and compliance. What to know : Ghana's Securities and Exchange Commission (SEC) started a 12-month regulatory sandbox for virtual asset service providers. The companies will be able to run their products in a controlled environment while regulators monitor risks and compliance. The results of the pilot program will be used to guide the final licensing rules under the new Virtual Asset Service Providers Act, 2025. Read full story Latest Crypto News Crypto Long & Short: AI agents choosing denationalized money 7 minutes ago Wells Fargo signals deeper push into crypto, filing trademark for WFUSD 46 minutes ago European Central Bank unveils tokenized finance plan to bolster EU's financial autonomy 58 minutes ago The Protocol: Ethereum Foundation starts experimenting with ‘DVT-lite’ technology 1 hour ago Binance.US names compliance veteran as CEO as regulation, competition get tougher 1 hour ago Bitcoin reverses overnight losses, rising to above $70,000 as oil renews decline 1 hour ago Top Stories U.S. February CPI matches forecasts, reinforcing expectations for no near-term rate cuts 3 hours ago Binance sues Wall Street Journal as newspaper says U.S. Dept. of Justice is investigating Iran transactions 3 hours ago Coinbase-backed AI payments protocol wants to fix micropayment but demand is just not there yet 7 hours ago Bitcoin traders bet on a rally above $80,000 11 hours ago Binance, PayPal and Ripple join Mastercard’s massive new push into blockchain payments 4 hours ago Next week could spice things up for bitcoin as seven central banks face an inflation test 8 hours ago