The Federal Deposit Insurance Corporation (FDIC) has given the green light to a proposal that will allow financial institutions to issue payment stablecoins with little oversight, sparking concerns that the move will enable stablecoin scams and leave consumers vulnerable to financial losses.
The proposal, which was approved by the FDIC Board of Directors on December 16, 2025, would implement the application provisions under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). The GENIUS Act allows insured depository institutions to issue payment stablecoins through a subsidiary and to engage in certain related activities.
An FDIC-supervised state nonmember bank or state savings association seeking to issue payment stablecoins through a subsidiary is required to apply to the FDIC for the subsidiary to be approved as a permitted payment stablecoin issuer. However, the proposal has been criticized for lacking adequate safeguards to prevent financial institutions from exploiting the system for their own gain.
Comments on the proposed rule will be accepted for 60 days after publication in the Federal Register, but many are questioning whether the public will be able to effectively hold the FDIC accountable for its actions. The move has been met with skepticism by consumer advocates and lawmakers, who argue that the GENIUS Act is a recipe for disaster.
The FDIC’s decision to approve the proposal has been seen as a major victory for the financial industry, which has been pushing for greater flexibility in the issuance of payment stablecoins. However, the move has been met with widespread criticism from consumer advocates and lawmakers, who argue that the GENIUS Act is a sweetheart deal for the financial industry at the expense of consumers.
The FDIC’s proposal is set to go into effect in the coming months, and experts are warning that the lack of oversight and regulation will only serve to further enable stablecoin scams and leave consumers vulnerable to financial losses. As the situation continues to unfold, one thing is clear: the FDIC’s decision to approve the proposal has set the stage for a major financial crisis.
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