Banking and Finance Law Daily Wrap Up, FINANCIAL TECHNOLOGY—Better Markets, other groups oppose FDIC stablecoin proposal, (May 19, 2026)

By Carrie DeLeon

Better Markets said the FDIC’s proposal on stablecoins is structurally biased toward facilitating payment stablecoin issuance rather than ensuring safety and the financial stability of the country.

Several banking associations this week filed comments in response to a proposed rulemaking issued by the Federal Deposit Insurance Corporation (FDIC) implementing a section of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) with respect to evaluating and processing applications for the issuance of payment stablecoins, suggesting the proposal is in need of further refinement.

Better Markets said it has significant concerns about the FDIC’s proposal to establish procedures under which an FDIC-supervised institution could issue payment stablecoins through a subsidiary. The FDIC and other federal payment stablecoin regulators are required under the GENIUS Act to establish a process and federal framework for the licensing, regulation, examination, and supervision of permitted payment stablecoin issuers (PPSIs) that prioritizes the safety and soundness of such entities.

“The FDIC’s latest stablecoin application proposal exemplifies the rushed, haphazard, and crypto industry-friendly approach banking regulators have taken to implement the flawed GENIUS Act, putting consumers, the Deposit Insurance Fund, and the broader economy at serious risk. Rather than working with the other banking regulators to develop a coordinated and comprehensive approach for these risky financial products, the FDIC moved unilaterally, sowing unnecessary confusion and even prompting pushback by the banking industry. The result is a reckless framework that would leave critical gaps in the very protections that exist to prevent financial crises and safeguard the hard-earned money of everyday Americans,” said Christopher Appel, director of banking policy, Better Markets.

Separately, joint comments filed by the American Bankers Association, the Bank Policy Institute, the Clearing House Association, the Consumer Bankers Association, and the Independent Community Bankers of America said the FDIC should establish rules that preserve the benefits of payment stablecoins without causing undue and unnecessary risks for consumers.

The associations are suggesting the FDIC coordinate with other agencies to ensure that application requirements for PPSIs are substantially similar; establish additional factors for the review of applications from prospective PPSIs that are subsidiaries of industrial loan companies; adopt “transparent, consistent, and appropriate risk-based standards” to guide the review and granting of waivers under section 5(f) of the GENIUS Act; and give agencies discretion to grant waivers with limitations or conditions to ensure “that allowing the PPSI to operate without complying with the limitations in the GENIUS Act would be consistent with its safe and sound operation and would not introduce risk to other financial institutions or the financial system more broadly.”

Better Markets also is calling on the FDIC to substantially revise the proposal. According to Better Markets, any final rule should eliminate the proposal’s deemed-approval framework and require affirmative FDIC action before any PPSI application may be approved; establish additional approval factors addressing “parent-bank impacts, step-in risk, operational readiness, systemic risk, and broader financial stability concerns;” require applicants to provide evidence-based demonstrations of operational capability, technological readiness, liquidity resilience, and capital sufficiency; require PPSI applicants to submit detailed analyses demonstrating how a “proposed stablecoin activity could fail without destabilizing affiliated insured depository institutions, consumers, payment systems, or broader financial markets;” strengthen the application process by requiring more robust information; establish a comprehensive and continuous post-approval supervisory framework; enhance transparency and accountability in the application and approval process; and coordinate implementation with other federal regulators.

“The FDIC should go back to the drawing board, coordinate with its fellow regulators, and produce a framework that puts safety, soundness, and the public interest first,” according to Better Markets.

Companies: American Bankers Association; Bank Policy Institute; Better Markets; Clearing House Association; Consumer Bankers Association; Independent Community Bankers of America

RegulatoryActivity: BankingOperations Blockchain DepositInsurance FinancialIntermediaries FinTech GCNNews PrudentialRegulation