That US government entity could be analyzing whether stablecoins are deposits or whether their ownership represents a deposit to the issuer. The government will subject the issuers of USDT and USDC stablecoins to regulations like banks after questions about their endorsement.

The US Federal Deposit Insurance Corporation (FDIC) is studying deposit insurance for stablecoins. For that reason, they are conducting preliminary talks to allow the coverage of the deposits of those assets.

That US banking regulator is evaluating whether certain stablecoins could be eligible for coverage. They are particularly studying transfer insurance for the reserves of stablecoin users at banks.

If the bank holding the collateral were to fail, the coverage would insure the holders against losses of up to USD 250,000. That occurs specifically amid stablecoin regulation in the United States.

The Purpose of the Creation of the FDIC

The FDCI is a government agency that seeks to protect consumers and the US financial system. People usually identify that body with the deposit insurance with which they help citizens when a bank fails.

The Glass-Steagall Act of 1933 created the FDCI to prevent bank failures during the Great Depression. Since then, that agency has stated that no depositor has lost a single penny of the insured funds.

The FDI Analyzes the Issuance of Stablecoins

The FDIC analyzes banks that want to issue stablecoins to see how regular direct deposit insurance would work. A government source explained that this is part of a process to bring those assets into the banking system responsibly.

That person added that it would all depend on what supports stablecoins. For example, he argued that they are simply a deposit if reserves at the Fed back them. Likewise, he expressed that it would be difficult to treat them as a deposit if the Treasury supports them.

Former FDIC attorney Todd Phillips stated that the US government entity might be analyzing whether stablecoins are deposits. He also said they might want to know whether ownership of a stablecoin represents a deposit for the issuer.

Phillips also recalled that each person has insurance for only USD 250,000. For that reason, the stablecoin issuer would have to investigate who the current holder of its stablecoin is and how many units he owns.

The lawyer announced that the FDIC has the objective of guaranteeing the security of the Deposit Insurance Fund (DIF). If the FDIC insured a stablecoin, the insurance would come out of the DIF. Therefore, the FDIC would like to ensure that they have a legal basis not to put the DIF at risk.

Regulations Will Be Similar to those of Banks

The Wall Street Journal recently announced that the government would subject stablecoin issuers to regulations like banks. Joe Biden’s administration is scrutinizing the USDT and USDC stablecoins, following questions about their endorsement.

The design of those assets seeks to maintain a stable price concerning a specific currency. For that reason, the value of a fiat currency, a physical product, the financing of a company, or even another cryptocurrency can support them. The best known include Tether (USDT), Paxos Standard (PAX), TrueUSD (TUSD), USDCoin (USDC), Binance USD (BUSD), and DAI.

By Alexander Salazar


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