Consensys Challenges FDIC Stablecoin Rules Under GENIUS Act

Blockchain software company Consensys has submitted a detailed response to the Federal Deposit Insurance Corporation (FDIC) regarding its proposed stablecoin regulations, raising concerns about how the rules could be interpreted and enforced under the GENIUS Act. The filing marks another major step in the ongoing debate surrounding crypto regulation in the United States.

The response follows a similar comment Consensys submitted to the Office of the Comptroller of the Currency (OCC) on May 1, along with a separate filing to the Treasury Department focused on state-level regulatory frameworks. According to the company, the three submissions represent a unified stance on the future federal framework that could shape payment stablecoin oversight for years to come.

Consensys highlighted four key areas in the FDIC proposal that it believes require revisions, particularly restrictions involving stablecoin yield offerings and third-party distribution arrangements. The firm argued that the current interpretation may exceed the original intent of the GENIUS Act by effectively preventing issuers from providing incentives or remuneration to stablecoin holders.

The company also criticized the proposal’s broad definition of third-party distribution, stating that it could unintentionally include common commercial agreements such as brand licensing partnerships. Consensys noted that lawmakers had previously considered expanding the ban to outside entities but ultimately chose not to include those amendments in the legislation.

Another major concern involved decentralized finance (DeFi) access through non-custodial crypto wallets. Consensys argued that the GENIUS Act preserves protections for self-custody tools and that wallet providers should not be treated as intermediaries when users independently interact with DeFi protocols. The company explained that when users deploy stablecoins into DeFi applications and earn protocol-generated yield, the wallet software itself is not facilitating those payments on behalf of issuers.

In its filing, Consensys also urged regulators to maintain supervisory flexibility instead of imposing automatic penalties tied to reserve, redemption, or capital shortfalls. The firm warned that rigid enforcement mechanisms could create market instability and negatively impact stablecoin holders.

Additionally, the company called for technology-neutral definitions related to distributed ledgers, smart contracts, and crosschain stablecoins to ensure innovation is not restricted by outdated terminology. The latest development comes as the CLARITY Act continues moving closer to a Senate floor vote, signaling increased momentum for crypto legislation in the U.S.