U.S. FDIC Chair: Under the GENIUS Act, stablecoins are "absolutely not" covered by deposit insurance

The Chair of the U.S. Federal Deposit Insurance Corporation (FDIC) clearly stated on Wednesday (3/11) that, under the latest regulatory rules implemented by the U.S. “GENIUS Act,” stablecoins including USDT and USDC will “not be eligible for any form of FDIC deposit insurance.” This move aims to strictly distinguish cryptocurrencies from traditional bank deposits and to break the market’s false impression that stablecoins are backed by the U.S. government.
(Background: Wall Street giants enter the scene! Wells Fargo applies for the “WFUSD” trademark, fully deploying crypto trading and stablecoin payments)
(Additional context: Bernstein optimistic about Circle’s 70% rise! Target price up to $190, bullish on stablecoins as AI and payment infrastructure)

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• GENIUS Act explicitly bans stablecoin insurance
• Prevent misleading claims, cut off “government backing” associations
• Banks can issue stablecoins, but reserves face strict regulation

As the U.S. gradually establishes a federal regulatory framework for cryptocurrencies, the government’s stance on digital assets is becoming clearer. FDIC Chair Travis Hill recently issued a firm and explicit statement regarding the regulatory status of stablecoins: under the new rules of the GENIUS Act, stablecoins will be completely excluded from federal deposit insurance coverage.

GENIUS Act explicitly bans stablecoin insurance

This historic bill, called the “U.S. Stablecoin National Innovation Guidance and Establishment Act” (GENIUS Act), was officially enacted in 2025 and is currently being actively promoted for implementation details by U.S. banks and market regulators.

The FDIC chair pointed out that the GENIUS Act explicitly includes a prohibition against providing any FDIC insurance for stablecoins (such as USDC issued by Circle or USDT issued by Tether, which aim to maintain parity with the dollar). Traditional bank deposits currently enjoy up to $250,000 in U.S. government-backed insurance, but this benefit will definitely not extend to stablecoins.

Prevent misleading claims, cut off “government backing” associations

Analysis indicates that the core purpose of this regulation is to draw a clear line between stablecoins and traditional fiat bank deposits. In the past, some issuers or market participants have operated in gray areas, leading investors to mistakenly believe that “dollar-pegged stablecoins” are equivalent to dollars stored in banks.

According to the GENIUS Act, future stablecoin issuers will face high transparency requirements. The bill not only explicitly bans marketing that portrays stablecoins as “guaranteed by the U.S. government” or “covered by FDIC insurance,” but also ensures consumers do not mistake these digital assets for U.S.-issued fiat currency.

Banks can issue stablecoins, but reserves face strict regulation

While the law rejects offering government guarantees, it does not completely stifle innovation. Instead, the GENIUS Act opens a door for traditional financial institutions, allowing insured depository institutions to issue stablecoins through establishing dedicated subsidiaries (permitted stablecoin issuers, PPSI).

To ensure financial stability, these issuers must adhere to extremely strict 1:1 reserve requirements, with reserves limited to very low-risk assets (e.g., excluding corporate bonds or stocks), to prevent bank runs. Overall, U.S. regulators have set the tone: responsible financial innovation is welcomed, but if stablecoins collapse, taxpayers and the federal insurance fund will not foot the bill.