The American Bankers Association and four associations yesterday offered several recommendations for proposed FDIC rulemaking to establish a process by which subsidiaries of institutions regulated by the agency can apply to become stablecoin issuers, as allowed under the Genius Act.
The Genius Act established a regulatory framework for payment stablecoins. The FDIC and other banking agencies are currently considering rulemaking to implement the law. The FDIC has proposed two rules. The first would establish the process for which subsidiaries can apply to become stablecoin issuers. The second would set capital, liquidity and risk management requirements for issuers.
In a joint letter to the agency, the associations made six recommendations:
- The FDIC should not end the comment deadline for the rulemaking on the application process before the end of the comment period for the rulemaking on capital, liquidity and risk management requirements. “Stakeholders cannot meaningfully comment on the FDIC’s application process proposal without understanding how the agency intends to apply the factors that will be considered in that process,” they said.
- The agency should work with the other banking and credit union regulators to ensure that application requirements for stablecoin issuers are substantially similar and appropriately rigorous across the board.
- The FDIC should include an opportunity for public comment on any applications submitted under the rule, “which would promote accountability, improve regulatory outcomes and align with established practices for bank applications.”
- The FDIC should establish additional factors for the review of applications from prospective stablecoin issuers that are subsidiaries of industrial loan companies. It also should require an ILC applicant to demonstrate that it can comply with applicable law, including federal consumer protection laws.
- The agency should adopt transparent, consistent and appropriate risk-based standards to guide the review and granting of waivers under the law’s temporary safe harbor provision. Stablecoin issuers can request an exemption from certain Genius Act requirements for roughly the first year the law is in effect.
- The FDIC should commit to revising and possibly updating its application standards and processes after the rule has been in effect for three years. “This re-evaluation would ensure that the FDIC’s application standards and processes remain appropriately tailored to observed risks and market developments as the payment stablecoin market develops over time,” they said.
