FDIC Must Assess Stablecoins’ Deposit Insurance Risk, Groups Say

The Federal Deposit Insurance Corp. risks leaving the insurance fund backing consumer deposits vulnerable to threats posed by stablecoins, even though it stated the digital assets won’t be covered, banking industry watchdogs said.

Allowing permitted payment stablecoin issuers to park up to 40% of their reserve assets at a single insured bank, as contemplated under the FDIC’s proposal, opens the door to runs that would jeopardize the Deposit Insurance Fund, the advocacy groups warned ahead of a comment deadline Tuesday.

The FDIC’s plan would impose “a new category of concentrated (and potentially enormous) contingent liability on the DIF, which the ...