June 9, 2026
[Via: email to Comments@fdic.gov through FDIC Website at https://www.fdic.gov/federal-register-publications)]
Travis Hill, Chairman
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Attn: Comments- RIN 3064—AG19
Re: GENIUS Act Requirements and Standards for FDIC-Supervised Permitted Payment Stablecoin Issuers and Insured Depository Institutions Notice of Proposed Rulemaking [RIN 3064—AG19]
Dear Chairman Hill:
The National Community Reinvestment Coalition (NCRC) appreciates the opportunity to comment on the notice of proposed rulemaking (NPRM) issued by the Federal Deposit Insurance Corporation (FDIC) regarding implementing the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) requirements and standards for FDIC-supervised stablecoin issuers and institutions.[1]
NCRC is a network of more than 700 community-based organizations dedicated to creating a nation that not only promises but delivers opportunities for all Americans to build wealth and attain a high quality of life. We work with community leaders and policymakers to advance solutions and build the will to solve America’s persistent racial and socio-economic wealth, income, and opportunity divides, and to make a Just Economy a national priority and a local reality.
NCRC urges the FDIC to: (1) address the risk of deposit flight and its impact to community investment and lending; (2) ensure regulatory definitions are consistent in the FDIC GENIUS Act final rule and with the various other GENIUS Act implementing rules and any subsequent legislation to avoid consumer protection issues; (3) seek input from other regulators and re-evaluate its technology neutral approach to deposit insurance because of the potential systemic and other risks associated with blockchain technology.
1 Yield provisions and presumption do not go far enough to prevent deposit flight.[2]
The GENIUS Act prohibits permitted payment stablecoin issuers from paying “the holder of any payment stable coin any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention of such payment stablecoin.”[3] The prohibition in the statute is limited to issuers, not other players in the stablecoin ecosystem, namely, cryptocurrency exchanges through which issuers currently indirectly pay yield to holders. For example, exchanges can hold stablecoin on the blockchain on behalf of a retail holder. Some issuers pass interest earned on the reserves it holds to the exchange, which the exchange then uses to pay the retail holder yield.[4] Exchanges may also pay yield to holders through other means, as well.
The FDIC GENIUS Act NPRM prohibits the “the paying of interest or yield simply for holding using or retaining a payment stablecoin, including through arrangements with affiliates or related third parties that effectively provide such yield.”[5] Activity-based rewards and yield would be allowed under this framework but it attempts to limit issuers from circumventing the prohibition through setting up arrangements with third parties and affiliates. Those efforts, unfortunately, are unlikely to be enough to prevent deposit flight — the movement of funds by households and businesses from bank deposit accounts to stablecoins.
Bank deposits fund bank lending activities and community investment and development. The incentivizing of use of stablecoins and the resulting deposit flight will seriously impair banks’ lending capabilities and ability to invest in their communities. According to the American Bankers Association, this is especially true of smaller community banks.[6] It notes that when community banks lose deposits, they must replace the funding, “often through higher-cost wholesale borrowing” and “the increased funding costs translate into less lending and higher borrowing costs for households and small businesses.”[7]
The US Treasury’s Borrowing and Advisory Committee (TBAC) estimated that as much as $6.6 trillion in deposits could move from the traditional finance sector into the stablecoin market.[8] The Independent Community Bankers Association (ICBA) predicts that the stablecoin market will “grow to $5 trillion, draining $1.3 trillion in deposits from community banks” resulting in a drop of $850 billion in community bank lending.[9] It estimates that community banks make approximately 60% of all small business loans and 80% of agricultural loans nationally.[10]
Banks operate within a broader public policy framework designed to ensure that federally supported financial institutions help meet household, small business, and community credit needs. Stablecoin issuers may increasingly compete with banks for customer funds while operating under a vastly different regulatory framework. The FDIC should consider whether large-scale migration of funds into stablecoin ecosystems could weaken the flow of capital into communities that depend on traditional lending institutions. For example, deposits held in insured depository institutions help support mortgage lending, small business lending, agricultural lending, branch networks, low-cost transaction accounts, and community development finance. When funds migrate into stablecoin ecosystems that do not carry comparable community reinvestment obligations, underserved communities may lose access to the credit and banking infrastructure that federal banking policy is supposed to preserve. NCRC has long advocated for requiring stablecoin issuers to reinvest a portion of their proceeds into community development projects in underserved communities.[11] It would allow for a more level playing field between banks and stablecoin issuers.
The GENIUS Act’s narrow prohibition of the payment of stablecoin yield raises significant deposit flight concerns that the FDIC GENIUS Act NPRM’s expansion to include affiliates and related third parties does not address.
2. Definitions need to be consistent between and among the rulemakings and legislation to avoid incongruous treatment and consumer protection issues.[12]
Because the current legislative and regulatory framework for the stablecoin and cryptocurrency market is in flux and evolving, it creates the potential for differing definitions and consumer protection implications. The GENIUS Act requires regulators including the Treasury Department, the Office of the Comptroller of the Currency (OCC), Federal Reserve, and the National Credit Union Administration (NCUA), as well as the FDIC, to issue implementing regulations.[13] Several proposed rulemakings are in process, including this one, while others have closed. For example, the comment period for the OCC’s proposed implementing regulation closed in May. In addition to these regulatory efforts, Congress is currently considering a digital asset market structure bill, the Clarity Act, which could expand on the GENIUS Act framework.
Given the complexity of the anticipated regulatory structure for the digital asset market and the interconnectedness of the US banking system, it is crucially important that definitions between and among the rulemakings and legislation be consistent. A lack of consistency in these definitions can result in inconsistent treatment of consumers because rights and responsibilities are tied to these definitions. For example, the OCC GENIUS Act NPRM defines the term “customer” as “a person that purchased (through any consideration) the products or services of person.[14] The FDIC GENIUS Act NPRM defines customer more narrowly in the context of issuance as “a person that purchases (through any consideration) the products or services of a PPPSI [permitted payment stablecoin issuer] directly from the PPSI.”[15] This definition excludes secondary market holders, end-users obtaining stablecoins via intermediaries, and wallet users with no direct interaction with issuers.
But, elsewhere in the proposed rule, the FDIC defines customer more inclusively in connection with the role of custodians to be “a person for whom or on whose behalf a custodian receives, acquires, or holds payment stablecoin reserves, payment stablecoins used as collateral, private keys, cash, and other property received in the course of the provision of custody services for such assets.”[16]
Rights and responsibilities flow from the FDIC’s definitions of customer and implicate things like redemption rights and disclosures. The contextual definitions of customer in the FDIC proposed rule may result in inconsistent treatment of like actors. A holder of a stablecoin that purchased it directly from an issuer would be a customer under both FDIC customer definitions; but if the holder purchased it from an exchange, it would only be a customer in connection with custody services. Inconsistent definitions means that two people holding the same stablecoin would have different rights depending on whether they bought directly from the issuer, through an exchange, or through a wallet. This is not merely a drafting problem – it has serious implications for the protections afforded stablecoin users and holders – and thus is a consumer-protection problem.
Creating uniformity within the FDIC’s proposed rule is only half the battle –different definitions for the same terms in other GENIUS Act implementing rules have the potential to create coordination challenges and divergent outcomes, including the incongruous results caused by which regulators’ rules apply.
3. Technology neutral approach to deposit insurance raises serious risks to financial system and consumers.[17]
In response to a series of banking failures, Congress, as part of the Banking Act of 1933, created the FDIC.[18] Part of the FDIC’s mission is to maintain stability and public confidence in the banking system by insuring deposits. Deposit insurance was created by the Banking Act of 1933 as a means of preventing bank runs – whereby depositors seek to withdraw funds en masse, and cause banks to fail because they lack the liquidity to pay out all depositors.[19]
The FDIC GENIUS Act NPRM proposes to “clarify” that the FDI Act’s definition of a deposit is “technology neutral,” meaning tokenized deposits are treated the same as other forms of deposits including in connection with deposit insurance coverage.[20] Currently, the FDIC insures deposits up to $250,000 per depositor per ownership category.[21] The proposed change would impact all FDIC insured accounts held at institutions including those supervised by other Prudential regulators, such as the OCC. However, the proposal is silent about any coordination with other regulators.
This so-called clarification introduces a level of uncertainty to something that has been in existence – and worked well – for over 90 years. The 24/7 nature of blockchain technologies and speed of blockchain transactions has the potential to increase the risk of bank runs – tokenized deposits can move more quickly, and banks may not be able or have the liquidity to respond. Increased bank runs could place stress on the deposit insurance system. It is also possible that tokenized deposits will move outside of the banking network into other cryptocurrency exchanges or platforms. It is unclear what the implications are for banks and the deposit insurance system when tokenized deposits travel in that more fluid, less regulated environment. Potentially, shocks to exchanges or platforms in the digital marketplace could cause systemic risks to the banking system. Also, although tokenized deposits may act similarly to stablecoins, they likely would have more favorable treatment because as deposits, they would be eligible for deposit insurance. Where the same or similar activities or products receive different regulatory treatment, regulatory arbitrage and consumer confusion thrives.
FDIC should not assume that the same legal label means the same practical risk. In light of recent market developments, such as the proposal by some of the largest US banks to create their own tokenized deposit network, it would be prudent to gather more information before finalizing this part of the proposed rule.[22] NCRC encourages the FDIC to refrain from finalizing its proposal regarding the treatment of tokenized deposits and re-evaluate it after receiving input from other Prudential regulators regarding the potential risks to the deposit insurance and banking systems.
Conclusion
NCRC urges the FDIC to:
- address the risk of deposit flight and its impact on community investment and lending;
- ensure regulatory definitions are consistent in the FDIC GENIUS Act final rule and with the various other GENIUS Act implementing rules and any subsequent legislation to avoid consumer protection issues;
- re-evaluate its technology neutral approach to deposit insurance after receiving input from other regulators, because of the potential systemic and other risks associated with blockchain technology.
Thank you for the opportunity to offer our input on the FDIC GENIUS Act NPRM. If you have any questions, please contact me at jvantol@ncrc.org, or Tara Flynn at tflynn@ncrc.org.
Thank you for your consideration.
Sincerely,
Jesse Van Tol,
President and CEO, NCRC
[1] FDIC, Requirements and Standards for FDIC-Supervised Permitted Payment Stablecoin Issuers and Insured Depository Institutions,” Notice of Proposed Rulemaking, 91 Fed. Reg. 18,534 (Apr. 10, 2026) [hereinafter FDIC GENIUS Act NPRM].
[2] See Questions 21-24, FDIC GENIUS Act NPRM at 18540.
[3] GENIUS Act § 4(a)(11); FDIC GENIUS Act NPRM at § 350.3(b)(4).
[4] Cong. Rsch. Serv., The Stablecoin Yield Debate (Mar. 2026), https://www.congress.gov/crs-product/IF13174.
[5] Staff Memo to FDIC Bd. of Dirs., Re: Notice of Proposed Rulemaking on GENIUS Act Requirements and Standards for FDIC-Supervised Permitted Payment Stablecoin Issuers and Insured Depository Institutions 2 (Apr. 7, 2026) [hereinafter Staff Memo].
[6] Sayee Srinivasan and Yikai Wang, The CEA Studied the Wrong Question on Stablecoin ‘Yield’ and Community Banks, ABA Banking J. (Apr. 13, 2026), https://bankingjournal.aba.com.
[7] Id.
[8] U.S. Dep’t of the Treasury, Treasury Borrowing Advisory Committee (Apr. 30, 2025), https://home.treasury.gov/system/files/221/TBACCharge2Q22025.pdf.
[9] Indep. Cmty. Bankers of Am., Stablecoins, Master Accounts, and National Trust Charters: Community Bankers Urge a Pause on Policies for Unaccountable Entities 4 (May 6, 2026), www.icba.org.
[10] Indep. Cmty. Bankers of Am., About Community Banking, www.icba.org.
[11] See Bakari Levy and Kevin Hill, The Need for Community Development Accountability for Stablecoin Issuers, NCRC (Jul. 14, 2025), https://ncrc.org.
[12] See Questions 1 and 3, FDIC GENIUS Act NPRM, at 18537.
[13] 12 USC § 5901 et. seq.
[14] 91 Fed. Reg. 10,202, 10,205 (emphasis added).
[15] FDIC GENIUS Act NPRM at 18535 (emphasis added) (limiting the application of the definition to part 350, subpart A.)
[16] FDIC GENIUS Act NPRM at 18556 (emphasis added) (limiting the application of the definition to part 350, subpart B).
[17] See Questions 131-139, FDIC GENIUS Act NPRM at 18561.
[18] GovFacts, Is Your Monday Safe: How Banking Deregulation Affects You (Dec. 5, 2025), https://govfacts.org.
[19] Id.
[20] Staff Memo at 6.
[21] FDIC GENIUS Act NPRM at 1855.
[22] Gina Heeb and Vicky Ge Huang, JPMorgan, Citi and Big Banks Plan New Tokenized Deposit System to Answer Crypto, MSN (June 4, 2026), www.msn.com.
