On March 11, FDIC Chairman Travis Hill spoke at a banking industry summit, where he outlined a forthcoming proposal that would clarify that payment stablecoins subject to the GENIUS Act (covered by InfoBytes here) are not eligible for “pass‑through” deposit insurance. Hill said that while pass‑through coverage allows deposits placed at a bank by a third party to be insured as if deposited directly by the end customer, the GENIUS Act prohibits marketing or representing payment stablecoins as federally insured or guaranteed. Treating stablecoin holders as insured depositors under this framework, Hill argued, would be inconsistent with the law’s prohibition. Hill stressed the need to decide the issue by regulation before any bank holding stablecoin reserves fails to avoid uncertainty over coverage, and invited public comment on the proposal.

Hill noted that current passthrough rules require end‑customer identities and interests to be ascertainable in the regular course, a condition uncommon in large stablecoin arrangements. If eligible and able to qualify, Hill asserted payment stablecoins could become more attractive and increase Deposit Insurance Fund exposure, potentially shifting how deposits are distributed across the banking system while leaving overall deposit volumes largely unchanged. As part of the same rulemaking, Hill said the FDIC will clarify that tokenized deposits meeting the statutory definition of a deposit retain insurance eligibility regardless of technology or recordkeeping. Hill’s remarks also highlighted other FDIC initiatives, including exploring the possibility of enabling nonbank purchases of failed banks and exploring an emergency shelf charter process to speed approvals in sudden failures, which Hill framed as consistent with efforts to bolster economic growth while promoting stability in the banking sector.