The Conference of State Bank Supervisors (CSBS) has recommended changes to the Federal Deposit Insurance Corporation’s (FDIC) proposed rule to implement the GENIUS Act.
In a comment letter to the FDIC, CSBS urged the agency to respect states’ inherent authority over state-chartered insured depository institutions and their subsidiaries. It would also like the FDIC to strengthen coordination and information sharing with state regulators to streamline oversight.
Specifically, CSBS officials made the following recommendations:
- Coordinate supervision and information sharing with state regulators overseeing state-chartered banks and stablecoin issuer subsidiaries;
- Clarify that nothing in the rule preempts state requirements applicable to state-chartered banks and their relationships with stablecoin issuer subsidiaries;
- Revise proposed capital requirements to better reflect issuer size, reserve assets, and risk profiles while maintaining consistency with successful state regulatory frameworks;
- Work with other federal regulators to ensure consistent implementation of statutory limits on stablecoin issuer activities; and
- Provide additional regulatory and supervisory guidance regarding tokenized deposits to support responsible innovation by banks.
CSBS officials said these proposed changes would better reflect state authority and address issuer risks.
“State supervisors have extensive experience overseeing digital asset activities, money transmitters, and state-chartered financial institutions. Effective coordination between federal and state regulators will strengthen oversight, reduce duplication, and help ensure that innovation can occur within a safe and sound regulatory framework,” CSBS president and CEO Brandon Milhorn, said.
Further, CSBS recommended scaling risk-based capital requirements to reflect the size of an issuer’s balance sheet, the composition of its assets, and the risks associated with its authorized activities. Combined with GENIUS Act reserve requirements, these capital standards would help protect individual issuers and the broader stablecoin market from run risks and financial distress.