FDIC Faces Pressure from Crypto Firm Over Stablecoin Yield Ban Expansion

The Federal Deposit Insurance Corporation (FDIC) has received a comment letter from Paradigm, urging it to reconsider its plans to expand the stablecoin yield ban in the GENIUS Act. The letter highlights that nothing in the GENIUS Act permits the FDIC to prohibit third parties from paying yields or create a rebuttable presumption that such payments violate the Act.

Paradigm's comments come as the Senate weighs the CLARITY Act, which preserves stablecoin rewards for third-party firms. The CLARITY Act is on course to become the second crypto bill passed by Congress after the GENIUS Act. The proposed expansion of the stablecoin yield ban has raised concerns among crypto firms, who are urging the FDIC to revise its rules.

Paradigm's letter also addressed other aspects of the GENIUS Act proposal, including white-label arrangements and tokenized reserve assets. The firm urged the FDIC to preserve white-label arrangements, which would allow stablecoin issuers to maintain separate reserve pools for each brand. Additionally, Paradigm asked the regulator to recognize tokenized reserve assets and reduce weekly supervisory reporting to monthly.