The Federal Deposit Insurance Corporation proposed a rule to establish a regulatory framework for stablecoin issuers, in line with a law signed last year by President Donald Trump, and is now seeking public input.

On Tuesday, the FDIC voted to propose a rule that would set forth standards for stablecoin issuers, including requirements involving reserve assets. This move follows other regulators’ efforts to implement the Guiding and Establishing National Innovation for U.S. Stablecoins, or GENIUS, Act.

The law created a federal regulatory framework for stablecoins, requiring stablecoins to be fully backed by U.S. dollars or similarly liquid assets, mandating annual audits for issuers with a market capitalization of more than $50 billion and establishing guidelines for foreign issuance.

FDIC Chair Travis Hill pointed to growth in the sector over the past few years as traditional finance delves into crypto and crypto firms seek bank charters. 

"Over the past two years, we’ve seen tremendous progress in this area, including a rapid shift in the posture of the federal government; enactment of the GENIUS Act, which establishes a framework for the regulation of payment stablecoins; and substantial technological development by both banks and nonbanks," Hill said in prepared remarks. "As a result, development of stablecoin and tokenized deposit products continues to advance, and use cases continue to multiply."

The FDIC, responsible for insuring deposits and maintaining financial stability, joins other regulators in crafting stablecoin rules. Since GENIUS was enacted, the Office of the Comptroller of the Currency released its rule set, and last week, the Treasury Department issued a notice of proposed rulemaking to address state-level oversight of smaller stablecoin issuers. 

The 191-page proposed rule from the FDIC would apply to permitted payment stablecoin issuers, which the GENIUS law defines as a stablecoin issuer that is a subsidiary of an insured depository institution or is allowed to issue stablecoins by a federal or state regulator.

Those issuers would have to follow certain reserve and risk management requirements. The rule also seeks to "clarify deposit insurance coverage of deposits that serve as reserve assets," said Chantal Hernandez, counsel at the FDIC, during Tuesday's meeting.

The proposed rule also follows the GENIUS law, which says that "payment stablecoins are not backed by the full faith and credit of the United States," and are not "subject to federal deposit insurance," said Eugene Frenkel from the FDIC during the meeting. 

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