FDIC stablecoin proposal could sweep up wallets and DeFi, Consensys warns

Blockchain firm Consensys submitted feedback to the Federal Deposit Insurance Corporation on Monday. The FDIC invited public comment on its proposed rules to implement the GENIUS Act. The suggested framework targets FDIC-regulated stablecoin issuers and any insured banks that handle custodial services.

Consensys argues that the FDIC’s proposed implementation of the GENIUS Act risks blurring the line between regulated stablecoin issuers and independent software providers.

Consensys’s filing specifically targets four areas. Its submission complements another May 1 filing by the Office of the Comptroller of the Currency (OCC) and aligns with a separate commentary to the Treasury Department on state regulatory frameworks. The firm expects these three filings to initiate a more comprehensive dialogue with federal banking regulators.

It stated:

We view this filing, alongside our OCC and Treasury comments, as the start of a conversation with the federal banking agencies about getting the GENIUS Act rules right.

Consensys

The company’s response comes as U.S. regulators move to finalize a federal framework for payment stablecoins under the Guiding and Establishing National Innovation for U.S. Stablecoins Act. The FDIC proposal would establish rules for reserve management, redemption policies, custody standards, and risk controls for FDIC-supervised stablecoin issuers and custodians.

Consensys shared four areas of refinement

Consensys identified four parts that needed revision to ensure developers’ safety and compliance with the law. It was especially against the FDIC’s attempt to extend the yield ban to “related third parties.”

While the regulation does not allow issuers to pay yield, it leaves some leeway for independent third-party incentives. In this regard, Consensys argued that the FDIC’s expansive interpretation would disrupt regular business operations, including brand licensing and distribution arrangements.

The second refinement concerns non-custodial interfaces that permit users to navigate decentralized finance applications. The GENIUS Act explicitly shields the self-custodial software carve-out. Consensys appealed to international regulators and federal courts, arguing that wallets are not regulated intermediaries. It asked the agency to confirm that interfaces do not act on behalf of issuers during independent DeFi yield activities.

The third revision sought to ensure that the FDIC retain certain provisions in its proposal that provide greater flexibility than the OCC model. It stressed the importance of multi-branded issuance and discretion in processing shortfalls in reserves, redemptions, and capital. It argued that inelastic enforcement can hurt investors, and discretionary oversight would work better.

Lastly, Consensys targeted technical terms, calling on the FDIC to adopt functional definitions for smart contracts and distributed ledgers. It also requested that the agency assess cross-chain stablecoins based on holders’ rights rather than solely on technical criteria.

Will the CLARITY Act get approved before 2027?

At the same time, the crypto community is increasingly optimistic about the legislative trajectory of the CLARITY Act. The prediction market on Gemini exchange metrics indicates a strong probability that the bill will advance to the U.S. Senate floor. Traders are betting heavily that the bill gets signed into law this year.

Despite the optimism, there’s no guarantee Congress will find the time with so much else on its plate. Journalist Eleanor Terrett even commented, “Possible but far from certain. Clarity will also be competing for floor time with reconciliation, FISA, and the farm bill.”

Some analysts have also cited concerns that the midterms may bring anti-crypto leaders to office, who could push the bill off the priority list.

Though Gemini projections indicate the U.S. Senate will bring the CLARITY Act to a floor vote within the next 30 days. It made the projection just a few days after the CLARITY Act’s 15-9 advancement through the Senate Banking Committee.

So far, market participants are pricing in roughly a 70% likelihood that crypto market structure legislation will be enacted before 2027. However, the probability falls to about 9% when looking at the passage before June 2026.

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