Travis Hill, the chair of the Federal Deposit Insurance Corporation (FDIC), clarified that the recently enacted GENIUS Act does not allow the agency to insure deposits for stablecoins. His comments were made during the American Bankers Association (ABA) Washington Summit.

“Under the provisions of the GENIUS Act, the FDIC will not extend deposit insurance, even indirectly through third parties.”
“This means no government insurance for stablecoin deposits when the law is enacted fully.”

As outlined in the GENIUS Act signed in July 2025 by US President Donald Trump, this framework limits stablecoin issuers from indicating their assets have FDIC backing. Additionally, the new legislation aims to eliminate ‘pass-through insurance’ arrangements by third parties.

Hill elaborated,

“If a bank holding the issuer’s reserves fails, the FDIC will refrain from insuring the deposits as corporate accounts typically do, which only covers up to $250,000.”

The GENIUS Act is to be set into motion 18 months after its signature or swiftly thereafter, once related regulations are ready via agencies such as the FDIC and the Treasury Department.

While deposit insurance won’t apply to stablecoin users, issuers are expected to ensure their dollar-pegged coins are fully backed.

Ongoing Discussions on Stablecoin Yield

Hill did not address the current deliberations in the US Senate surrounding stablecoin yield in his speech.
The ABA previously expressed concerns about stablecoins substituting for deposits by potentially undermining community bank lending due to yields and interest payments.

Meetings at the White House are ongoing with industry leaders to delineate the way forward on this sensitive topic.