FDIC Chairman: Stablecoins will not receive any form of deposit insurance under the GENIUS Act.

At the American Bankers Association Summit in Washington, D.C., FDIC Chairman Travis Hill stated that the FDIC plans to propose a rule explicitly stating that payment-type stablecoins subject to the GENIUS Act do not qualify for "transfer insurance," meaning that third-party financial institutions cannot obtain government deposit protection on behalf of users. Hill stated that this position aligns with the legislative intent of the GENIUS Act, although the act does not explicitly prohibit such arrangements. Hill pointed out that current transfer insurance rules require end-customer identity and rights to be verified through regular processes, which is not a common feature of large stablecoin arrangements. Although stablecoins are not insured by the FDIC, the GENIUS Act requires them to be fully insured. Furthermore, Hill stated 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. Meanwhile, White House crypto advisor Patrick Witt continued to defend the CLARITY Act on the X platform, stating that attempts to turn it into an anti-competitive act are undesirable. Jefferies analysts pointed out this week that the growth of stablecoins could lead to a 3% to 5% outflow of core bank deposits over the next five years.