Consensys has urged the Federal Deposit Insurance Corporation to revise parts of its proposed stablecoin framework, arguing that several provisions tied to the GENIUS Act could unintentionally restrict ordinary distribution models and access to decentralized finance tools.

Summary

Consensys said parts of the FDIC’s proposed stablecoin rules could go beyond the intent of the GENIUS Act.
The company argued that self-custodial wallet providers should not be treated as intermediaries when users access DeFi protocols independently.
Consensys also warned that automatic penalties tied to reserve or redemption shortfalls could create risks for stablecoin holders during periods of stress.

According to a filing released by the blockchain software company, the response forms part of a coordinated series of submissions to U.S. regulators that also included comments sent to the Office of the Comptroller of the Currency on May 1 and a separate Treasury Department submission covering state-level oversight frameworks.

Consensys said the three filings together outline its position on how payment stablecoins should be regulated under the new federal framework expected to govern the sector over the coming decade.

At issue are several provisions contained in the FDIC’s proposed rule implementing the GENIUS Act, the stablecoin law signed earlier this year that introduced reserve, redemption, custody, and capital standards for permitted issuers.

Back in April, the FDIC voted to release a 191-page proposal requiring covered stablecoin issuers to maintain 1:1 reserves using cash or highly liquid assets such as short-term U.S. Treasuries. The proposal also introduced mandatory redemption timelines, audit obligations for large issuers, and capital and liquidity requirements. Under the draft framework, stablecoin holders themselves would not receive federal deposit insurance protection even if reserve funds are held at insured banks.

Consensys pushes back on yield restrictions

Within its latest filing, Consensys said the FDIC’s interpretation of restrictions on stablecoin remuneration goes beyond what lawmakers intended when drafting the GENIUS Act.

The company argued that the proposal could sweep in standard commercial arrangements involving third-party distribution and branding agreements.

In the filing, Consensys stated that the “proposed presumption reaches past the statute to capture commonplace commercial distribution arrangements, including ordinary brand licensing.”

The company also pointed to the legislative history surrounding the GENIUS Act, stating that lawmakers had previously discussed extending restrictions to outside parties before ultimately abandoning those amendments.

Another section of the filing focused on decentralized finance access through self-custodial wallet software. Consensys argued that the GENIUS Act preserved protections for non-custodial tools and that wallet developers should not be treated as intermediaries when users independently interact with DeFi protocols.

According to the company, a user deploying stablecoins into a DeFi application through a self-custodial wallet is not receiving yield from the issuer itself. Instead, any returns are generated by the protocol being accessed.

Elsewhere in the submission, Consensys recommended that regulators avoid automatic enforcement actions tied to reserve, redemption, or capital shortfalls. The company warned that mandatory penalties could create what it described as “cliff-edge dynamics” that may harm stablecoin holders during periods of stress.

Technical definitions also drew attention in the filing. Consensys asked regulators to adopt technology-neutral language when defining distributed ledgers, smart contracts, and cross-chain stablecoin activity.

Meanwhile, federal regulators have continued building out the GENIUS Act framework ahead of statutory deadlines later this year. Earlier FDIC guidance aligned closely with a February proposal from the OCC, which similarly required full reserve backing and outlined approval pathways for stablecoin issuers operating under federal supervision.

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