SEO-Optimized Headline: FDIC to Propose Stablecoin Rule This Month, Acting Chairman Hill Confirms: A Deep Dive into the GENIUS Act Implementation
Engaging Introduction:
In a pivotal development for the U.S. digital asset landscape, the Federal Deposit Insurance Corp. (FDIC) is poised to take its first concrete step toward a federal stablecoin framework. FDIC Acting Chairman Travis Hill has confirmed the agency expects to issue a proposed rule establishing an application process for stablecoin issuers before the close of December 2025. This announcement, detailed in prepared testimony for a December 2nd House Financial Services Committee hearing, marks the initial regulatory action under the recently enacted Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The move signals a shift from legislative debate to active rulemaking, setting the stage for a structured federal oversight regime for payment stablecoins—a cornerstone of the crypto economy. With other agencies like the Federal Reserve and Treasury Department concurrently working on their portions of the law, the U.S. financial regulatory machinery is now formally engaged in shaping the future of dollar-denominated digital currencies.
The GENIUS Act: From Legislation to Regulatory Action
The confirmation from Acting Chairman Hill represents the operationalization of the GENIUS Act, which became law earlier in 2025. This legislation established a foundational framework for the federal supervision of payment stablecoin issuers, aiming to provide legal clarity and consumer protections for a market that has historically operated in a regulatory gray area. The Act designates specific roles for multiple federal and state entities, creating a mosaic of oversight rather than relying on a single regulator.
Hill’s testimony explicitly outlines the FDIC’s immediate priority: "issuing a proposal for how the agency will handle issuers that apply for federal oversight." This initial proposed rule on the application framework is a procedural but critical first step. It will define who can apply, how they must apply, and what preliminary criteria they must meet to be considered for FDIC supervision as a payment stablecoin issuer. Following this, Hill stated the FDIC plans to issue "a proposed rule to implement the GENIUS Act’s prudential requirements for FDIC-supervised payment stablecoin issuers early next year." These subsequent rules will address the substantive heart of regulation: capital requirements, liquidity standards, and rules governing the quality of reserves that back stablecoins.
The FDIC's Mandate: Capital, Liquidity, and Reserve Quality
As a primary banking regulator, the FDIC’s core mandate under the GENIUS Act focuses on the financial soundness of any bank it supervises that chooses to issue stablecoins. Hill’s prepared remarks confirm this focus area. The agency is tasked with writing rules for capital requirements, which will determine how much loss-absorbing capital an issuing bank must hold relative to its stablecoin liabilities. This is a fundamental banking principle designed to ensure institutions can withstand financial stress.
Furthermore, the FDIC must establish liquidity standards. For stablecoin issuers, liquidity is paramount; they must be able to meet redemption requests promptly, especially during periods of market volatility or loss of confidence. The rules will likely specify what types of high-quality liquid assets qualify as appropriate reserves. Finally, regulating the quality of reserves is perhaps the most direct consumer protection measure. It moves beyond simply requiring "1-to-1" backing—a common claim among issuers today—to defining what constitutes that "1." The rules will set standards for asset eligibility, custody, and auditability, aiming to prevent scenarios where reserves are illiquid, risky, or inadequately segregated.
The Rulemaking Process: A Marathon, Not a Sprint
It is crucial for industry participants and observers to understand that Hill’s announcement is the beginning of a lengthy administrative process. As he noted, a federal agency proposing such rules must release them for public comment, a period that typically lasts several months. During this time, banks, crypto firms, industry associations, consumer advocacy groups, and other stakeholders will submit detailed feedback, critiques, and suggestions.
The FDIC will then need to review and potentially incorporate this feedback before issuing a final rule. Only after this final rule is published will the new system be set up to go into effect, often over an extended compliance period to give institutions time to adapt. Therefore, while the proposal this month is a significant milestone, the full regulatory regime is not imminent. This timeline underscores the importance of sustained industry engagement throughout the comment period to shape workable and effective regulations.
A Coordinated Regulatory Effort: The Fed and Treasury's Role
The FDIC is not acting in isolation. Hill’s testimony was part of a broader hearing featuring other key regulators, highlighting the multi-agency approach mandated by the GENIUS Act. In her own prepared testimony, Federal Reserve Vice Chair for Supervision Michelle Bowman stated the central bank was working "to develop capital, liquidity, and diversification regulations for stablecoin issuers as required by the GENIUS Act." This indicates parallel rulemaking tracks at different agencies for institutions under their respective jurisdictions.
Similarly, Hill noted that other agencies, including the Department of the Treasury, have been working on their portions of GENIUS Act duties. The Treasury’s role likely involves broader policy coordination, anti-money laundering (AML) and counter-financing of terrorism (CFT) frameworks, and potentially aspects related to interoperability and systemic risk. This coordinated effort aims to create a cohesive national policy rather than a patchwork of conflicting standards.
Beyond Stablecoins: Tokenized Deposits on the Regulatory Radar
Hill’s testimony also revealed regulatory attention expanding into adjacent areas of bank-led digital asset innovation. He stated that in light of recommendations from a 2025 report by the President’s Working Group on Digital Asset Markets, the FDIC is "currently developing guidance to provide additional clarity with respect to the regulatory status of tokenized deposits."
Tokenized deposits represent digital claims on traditional bank deposits recorded on a blockchain or distributed ledger. They differ from stablecoins in that they are direct liabilities of a specific bank to its customer, rather than a more generalized digital currency. Regulatory clarity here is sought by large banks exploring blockchain technology to improve settlement efficiency and create new financial products. This development signals that U.S. regulators are contemplating a holistic framework for various forms of digital money issued by regulated financial institutions.
Contextual Backdrop: Congressional Scrutiny and "Choke Point 2.0"
The hearing itself occurred within a context of heightened congressional scrutiny over financial regulators' approach to digital assets. Just hours before Hill's testimony was published, a report from the House Financial Services Committee, led by Republican Chairman French Hill, detailed grievances over what it termed "Operation Choke Point 2.0."
The report alleges that agencies including the Securities and Exchange Commission (SEC) and Federal Reserve systematically resisted pro-innovation crypto policy during the Biden administration through aggressive enforcement and restrictive guidance rather than clear rulemaking. While focused on past actions under different leadership at some agencies, this political backdrop highlights the ongoing tension between Congress—which passed the GENIUS Act—and elements of the executive branch's regulatory apparatus. It frames the current FDIC and Fed rulemaking efforts as part of a congressionally-directed course correction towards establishing clear federal rules for digital assets.
Strategic Conclusion: Laying the Foundation for a New Era
The FDIC's imminent proposal for a stablecoin application framework is more than just another regulatory announcement; it is the foundational action turning legislative intent into an actionable regulatory pathway. For years, the stablecoin market has been defined by private innovation operating under uncertain state money transmitter licenses or limited federal trust charters. The GENIUS Act and its implementation represent a deliberate move to bring significant elements of this market under a tailored federal banking regime.
For market participants, several key takeaways emerge:
- Clarity is Coming: A formal application process will define eligibility for federal oversight, moving beyond ambiguity.
- Standards Will Rise: Future rules on capital, liquidity, and reserves will establish a high bar for safety and soundness, potentially differentiating federally-supervised stablecoins from others in the global market.
- Engagement is Critical: The public comment period for these proposed rules will be a vital opportunity for industry to provide practical input.
- Broader Digital Asset Strategy: The parallel work on tokenized deposit guidance indicates regulators are building a comprehensive approach to digitized bank liabilities.
Readers should watch closely for two immediate developments: first, the publication of the FDIC's proposed application rule later in December 2025, which will reveal initial eligibility criteria; and second, subsequent proposals from both the FDIC on prudential standards and from other agencies like Treasury on complementary rules in early 2026.
This coordinated rulemaking effort will ultimately determine whether the U.S. can foster a robust, compliant, and innovative digital dollar ecosystem that operates with safety at its core—a foundational question for both domestic finance and global financial competitiveness in an increasingly digital age