Key Highlights
- Blockchain Association filed a joint comment letter to the FDIC on GENIUS Act implementation.
- The group urged the FDIC to avoid overly broad restrictions on stablecoin issuers.
- The filing emphasized reserve segregation, objective oversight, and support for competition.
The Blockchain Association has filed a joint comment letter with the Federal Deposit Insurance Corporation (FDIC), urging changes to the agency’s proposed rulemaking for payment stablecoin issuers under the GENIUS Act.
The letter, filed on May 18, highlights the need for a regulatory framework that would promote responsible innovation in the space while maintaining safety and soundness standards.
The Blockchain Association said the GENIUS Act was enacted to foster innovation and create various avenues for companies to become permitted payment stablecoin issuers (PPSIs).
It emphasized that the FDIC’s final guidance should stick strictly to the provisions of the act without adding any further regulatory burden. The comment letter highlighted various concerns, including reserve segregation, ownership structures, operational oversight, and the treatment of blockchain-based technologies in the approval process.
Association calls for reserve segregation
The group said stablecoin reserves should be kept separate from a parent bank’s balance sheet.
According to the filing, this ring-fencing would protect stablecoin holders with “super-priority” claims on reserves in insolvency scenarios and prevent contagion risks to the broader banking system.
The association also urged the FDIC to interpret the Act’s safety and soundness factors narrowly, objectively, and in a technology-neutral manner. It said areas such as operational resilience, cybersecurity, and custody should be clearly defined rather than used as catch-all categories for subjective concerns.
The filing also cautioned regarding multi-bank ownership models, noting potential governance deadlocks, uneven risk-sharing, and resolution complexities. BA recommended strong governance, reporting, and risk-management requirements for such structures instead of outright restrictions.
Need for close examination
The letter called for close examination of arrangements within groups, parent company guarantees, and other related party transactions. It also said that more considerations should be made with regard to ILC subsidiaries, particularly proof of compliance with consumer protection laws.
BA said it expects far more than 10 applicants and encourages the FDIC to prepare for such an eventuality. It further notes that preparing for a strong flow of applicants is essential to prevent unintentional preference for well-resourced applicants and to ensure application processing in a timely manner.
Consensys filed similar comments
Consensys also submitted a comment letter to the FDIC on the same day. In its comments, the company highlighted four issues that it believes need further refinement in order to be consistent with the law and foster innovation as well as consumer protection.
These are the FDIC’s proposed rebuttable presumption concerning stablecoin yield limitations, non-custodial software interfaces, discretionary supervisory actions, and blockchain definitions.
FDIC to review comments before finalization
Blockchain Association warned that overly broad or unclear requirements could reduce competition and benefit only the largest companies, undermining Congress’s goal of encouraging private-sector participation in stablecoin issuance.
The FDIC is expected to review public comments before finalizing rules governing the application process for payment stablecoin issuers supervised by the agency.
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