The post Stablecoins just lost key battle as insurance protection to be reserved only for bank-issued tokens appeared on BitcoinEthereumNews.com.

The stablecoin debate in Washington is increasingly becoming a fight over a single question: who gets to keep deposit insurance on-chain? FDIC Chair Travis Hill signaled that payment stablecoins under the GENIUS Act should not qualify for pass-through insurance, while tokenized deposits that meet the legal definition of a deposit would retain the same insurance treatment as traditional bank accounts. That distinction may prove decisive. If banks can offer on-chain dollars that preserve deposit insurance while stablecoins cannot, the competitive balance shifts. Stablecoins may still dominate open networks, but banks would retain the core advantage that has always anchored the financial system: insured money. In that scenario, the stablecoin battle is no longer just about technology or distribution. Whether users prefer open, programmable dollars without insurance or bank-issued tokens that carry the full weight of the existing safety net will be the deciding factor. In a Mar. 11 speech at the ABA Washington Summit, Hill said the agency plans to propose that payment stablecoins subject to the GENIUS Act are not eligible for pass-through insurance. In the same section of the speech, he said the FDIC also plans to clarify that tokenized deposits that satisfy the statutory definition of a deposit should receive the same regulatory and deposit insurance treatment as non-tokenized deposits. Hill also said the agency wants to comment on how existing pass-through rules should apply to tokenized deposit arrangements involving third parties. The FDIC Chair’s speech effectively sketches a two-tier map of on-chain dollars. Under that map, payment stablecoins can be regulated and widely used, yet would lack federal insurance marketing rights and, if Hill’s proposal sticks, would not get pass-through insurance. On the other hand, tokenized deposits remain within the legal category of bank deposits when they qualify, which means they can retain the core advantage…

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Filed under: News - @ March 19, 2026 2:22 pm