The U.S. Federal Deposit Insurance Corporation (FDIC) presented a detailed overview of its ongoing supervisory reforms and its progress on stablecoin regulation during a House Financial Services Committee hearing titled “Oversight of Prudential Regulators.” Acting Chair Travis Hill submitted prepared testimony that described recent achievements at the agency and the next steps in implementing the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.
Hill and the Committee discussed the FDIC’s plans to strengthen regulatory clarity for banks, improve examination consistency, and build the federal framework that now governs stablecoin issuers. The hearing also included remarks from leaders of the Federal Reserve, the Office of the Comptroller of the Currency, and the National Credit Union Administration.
FDIC highlights broad efforts to modernize supervision
Hill noted that the FDIC has spent the past ten months reassessing its regulatory and supervisory approach. The agency intends to place more emphasis on core financial risks and less on procedural matters. FDIC leadership reviewed existing regulations, exam manuals, and guidance materials in order to update its approach to oversight and resolution.
Chairman Hill said the FDIC aims to strengthen its role in protecting depositors and maintaining the stability of the banking system while also supporting access to capital and responsible economic growth. He underscored the importance of on-site examinations as a core tool for identifying material risks across supervised institutions.
Agencies advance definition of “unsafe or unsound” practices
The FDIC and the Office of the Comptroller of the Currency proposed a joint rule in October to define an “unsafe or unsound practice” under section 8 of the Federal Deposit Insurance Act. The proposal sets uniform standards for matters requiring attention and non-binding supervisory observations.
The agencies intend to narrow the focus of supervisory criticisms to the issues most relevant to safety and soundness. The FDIC expects significant public comment on the proposal.
FDIC prepares final steps for new Office of Supervisory Appeals
The FDIC also proposed the creation of an Office of Supervisory Appeals. This office would operate independently from divisions that issue supervisory determinations. It would review appeals and ensure consistent, apolitical decision-making.
The agency plans to recruit staff with extensive banking knowledge and direct supervisory experience. Hill stated that external recruitment reduces the likelihood of prior relationships with exam staff and improves impartiality. The FDIC expects to finalize guidelines for the new office soon.
FDIC confirms timeline for GENIUS Act implementation
A significant portion of Hill’s testimony addressed the GENIUS Act, which President Donald Trump signed into law in July. The act created the first federal framework for stablecoin oversight. It assigns regulatory responsibilities across federal and state agencies and places the FDIC in charge of supervising and licensing stablecoin-issuing subsidiaries of FDIC-supervised institutions.
Hill confirmed the timeline for rule proposals. He stated:
"The FDIC has begun work to promulgate rules to implement the GENIUS Act; we expect to issue a proposed rule to establish our application framework later this month and a proposed rule to implement the GENIUS Act’s prudential requirements for FDIC-supervised payment stablecoin issuers early next year."
These prudential standards will include capital requirements, liquidity expectations, and reserve asset diversification rules for stablecoin issuers under FDIC oversight. All proposed rules will enter a public comment process before finalization.
Guidance on tokenized deposits is underway
Hill referenced recommendations from the President’s Working Group on Digital Asset Markets. The report encouraged agencies to clarify permissible activities for banks, including tokenization of assets and liabilities.
Hill said:
“We are also currently developing guidance to provide additional clarity with respect to the regulatory status of tokenized deposits.”
This guidance aims to help banks determine how tokenized liabilities fit into existing supervisory expectations.
Federal Reserve outlines its related responsibilities
Federal Reserve Vice Chair for Supervision Michelle Bowman noted parallel efforts underway at the central bank. In her prepared testimony, she said the Fed was working “to develop capital, liquidity, and diversification regulations for stablecoin issuers as required by the GENIUS Act.”
Her remarks signaled coordination among federal banking supervisors as they establish the first nationwide regulatory structure for stablecoin issuers.
Gunel Ismayilova
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