With record adoption of blockchain technology, stablecoins have come to the fore.
Their adoption signaled growing demand, shifting from purely individual transactions to corporate and central bank transfers.
In conclusion, stablecoin Its market capitalization rose to an all-time high of $314 billion, with a transaction volume of $97 billion. Amid this growing market dominance, the US Congress passed the GENIUS Act, providing regulatory clarity regarding stablecoin use.
Stablecoin users are not eligible for deposit insurance
Implementation of the Genius Act has come with obstacles that have led to direct conflicts, especially between banks and the crypto industry.
Travis HillThe head of the U.S. Federal Deposit Insurance Corporation (FDIC) presented the main rules his agency is working on.
The proposed rule aims to clarify that direct deposit insurance will not be allowed for stablecoin users.
According to Mayor Hill, users will not receive any benefit from the government’s guarantee on their funds after the current law comes into force.
Under the GENIUS Act, regulators added a ban on FDIC insurance for stablecoin assets.
Hill added:
The FDIC plans to recommend that payment stablecoins subject to the Genius Act are not eligible for pass-through insurance.
Additionally, the GENIUS Act prohibits stablecoin issuers from representing that their payments are fully backed by the faith of the US government.
Therefore, Hill argued, such a ban operated within the law. He added:
Treating stablecoin holders as insured depositors even on a pass-through basis seems inconsistent with the GENIUS Act.
It is also difficult to predict the extent to which stablecoin arrangements would qualify for pass-through insurance if they were eligible.
Usage still stable
Despite increasing barriers for stablecoin users, market usage continues to grow, reaching a record high. According to Artemis data, Stablecoin Adjusted Transaction Volume increased to $7.2 trillion with 1.9 billion stablecoin transactions.
At the same time, addresses continued to increase, reaching 48.7 million. Increasing transaction volume and address numbers together signaled strong, organic demand for these assets.
This also demonstrated the growing acceptance of stablecoins as a means of payment among all market participants.
With regulatory clarity in place and the potential passage of the Digital Asset Market Clarity Act, stablecoin usage is positioned to grow even further. Therefore, the lack of deposit insurance is unlikely to derail the growth currently experienced in the sector.
Final Summary
- FDIC Chairman Travis Hill said payment stablecoins subject to the Genius Act are not eligible for direct insurance.
- Stablecoin adoption and usage continues to grow, reaching a record high of $314 billion in market cap and $7 trillion in adjusted volume.
