TL;DR

FDIC Chair Travis Hill confirms stablecoins won’t receive federal deposit insurance protection.
The GENIUS Act establishes 18-month implementation timeline for payment stablecoin regulations.
Pass-through insurance proposal rejected as it would extend FDIC coverage beyond limits.

Travis Hill, chair of the US Federal Deposit Insurance Corporation (FDIC), made his position clear before the banking industry: the agency will not guarantee deposits linked to payment stablecoins once the GENIUS Act takes full effect.

Hill delivered the statement in remarks prepared for the American Bankers Association (ABA) Washington Summit, and in doing so resolved one of the most consequential open questions surrounding the new US digital asset regulatory framework.

The GENIUS Act, passed by Congress and signed into law by President Donald Trump in July 2025, establishes the ground rules for payment stablecoins in the American market. Full implementation runs on an 18-month timeline from the date of signing, or 120 days after agencies like the FDIC and the Treasury Department finalize their internal regulations. 

As that process moves forward, Hill outlined two concrete restrictions: stablecoin issuers cannot claim their assets carry FDIC backing, and a proposal currently under review seeks to ban so-called “pass-through insurance” by third parties.

What Pass-Through Insurance Means and Why the FDIC Opposes It

The pass-through insurance mechanism works as follows: if a bank holding a stablecoin issuer’s reserves were to fail, deposit insurance would not cover the account as a standard corporate deposit — capped at $250,000 — but would instead distribute coverage among individual stablecoin holders. Hill stated directly that allowing such a structure would extend the reach of federal insurance well beyond its established limits, creating an exposure the agency refuses to absorb.

Despite excluding stablecoins from deposit insurance, the law does require issuers to fully back every dollar-pegged coin in circulation. Full backing does not equal federal insurance, but it sets a solvency floor that regulators consider adequate to protect end users.

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Meanwhile, the stablecoin debate extends into the digital asset market structure bill currently under Senate review. There, banking groups and crypto industry representatives clash over three points: whether stablecoins should pay yield to holders, how to regulate tokenized securities, and what ethical standards to apply to market participants. 

The ABA already warned that allowing interest or reward payments on stablecoins would turn them into direct substitutes for bank deposits, cutting into regional banks’ capacity to extend credit. The White House held three meetings with industry leaders so far this year, but as of Wednesday no clarity existed on whether or when the legislation would advance.

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Filed under: News - @ March 11, 2026 10:21 pm