The Blockchain Association has issued a strong warning to the Federal Deposit Insurance Corporation against creating stablecoin rules that disproportionately favor large banking institutions. According to reports from AMBCrypto, the crypto industry group submitted a comment letter on 18 May responding to the FDIC's proposed framework governing how FDIC-supervised institutions could obtain approval to issue payment stablecoins under the GENIUS Act. The association argued that Congress intended the law to support a broad mix of stablecoin issuers, including fintech firms and non-bank entities, rather than concentrating the market among only the largest banking institutions.
One of the most significant parts of the letter focused on reserve segregation and bankruptcy protections for stablecoin holders. As reported by AMBCrypto, the Blockchain Association argued that payment stablecoin reserves should remain legally and operationally separated from the broader balance sheets of parent banking institutions. The group emphasized that stablecoin reserves should not function as general funding sources for banks or become entangled with traditional deposit liabilities during insolvency scenarios. The letter also called for 'super-priority' treatment for stablecoin holders, arguing that reserve assets should remain ring-fenced and clearly identifiable even during a bank resolution process.
The association also warned the FDIC against relying on broad or subjective standards when evaluating stablecoin issuer applications. According to AMBCrypto, the group argued that regulators should focus on measurable operational risks, including cybersecurity, custody controls, operational resilience, sanctions compliance, and redemption systems. The letter cautioned against using generalized skepticism toward digital assets or vague reputational concerns as implicit barriers to entry for newer stablecoin issuers. The filing reflects growing concern within the crypto industry that implementation of the GENIUS Act could become more restrictive than lawmakers originally intended.
The comments arrive as banks, fintech firms, stablecoin issuers, and regulators increasingly compete to shape the future structure of the U.S. stablecoin market. As reported by AMBCrypto, how regulators ultimately define reserve rules, issuer eligibility, and supervisory standards could determine whether the next phase of stablecoin adoption is led primarily by banks or by fintech-native firms. The debate highlights one of the core policy tensions emerging around stablecoin regulation: whether dollar-backed digital assets should operate as narrowly segregated payment instruments or become more deeply integrated into traditional banking structures.
