SS #58 - FDIC Unveils First Federal Framework for Bank-Led Stablecoin Issuance

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The digital asset landscape is evolving quickly as the FDIC initiates a formal rulemaking process under the GENIUS Act, establishing a structured federal path for financial institutions to issue payment stablecoins through subsidiaries. While this move brings much-needed regulatory clarity to the sector, industry leaders are also diversifying their offerings; Tether recently launched PearPass, a local-first password manager designed to bypass the centralized server vulnerabilities that have historically compromised cloud-based storage.

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In Today's Edition:

• Headline: FDIC Unveils First Federal Framework for Bank-Led Stablecoin Issuance

• Quick Bites: Tether Launches Peer-To-Peer Password Manager PearPass to Curb Cloud Breach Risks

• Yield of the Week: 30% APY on Yuzu

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HEADLINE

FDIC Unveils First Federal Framework for Bank-Led Stablecoin Issuance

State of play: The FDIC has officially initiated the rulemaking process to allow financial institutions to issue payment stablecoins through subsidiaries, marking a critical step in the implementation of the GENIUS Act.

• Institutions must now provide detailed ownership structures, clear operational scopes, and engagement letters from registered accounting firms to receive issuance approval.

• This move follows the passage of the GENIUS Act, which mandates full backing by liquid assets and annual audits for large-scale issuers (market cap >$50B).

• The FDIC plans to introduce additional rules in the coming months specifically addressing capital, liquidity, and risk management requirements for these subsidiaries.

What’s Next: A surge in filings from traditional banks is expected as they move to legitimize their digital asset departments. Watch for the FDIC’s upcoming release on capital requirements, which will determine the actual cost of entry for new issuers.

Why it Matters: This moves stablecoins from a regulatory gray area into the regulated banking perimeter. It provides the legal certainty required for mass institutional adoption and significantly reduces the systemic risk of unbacked "phantom" reserves.

Our Take: Legitimacy has arrived, but it comes with a price tag. While these strict audit and liquidity standards will increase operational costs, they eliminate the "trust deficit" that has historically hindered the sector. The opportunity now lies in institutional-grade payments, though smaller fintechs may struggle to meet the FDIC's looming capital hurdles.

QUICK BITES

• SoFi launches SoFiUSD stablecoin.

• Exodus, MoonPay to launch US dollar stablecoin in early 2026.

• Terraform Labs liquidator sues Jump Trading for $4B in damages.

• Tether leads $8M round in Lightning-based payment processor Speed.

• PayPal to use PYUSD stablecoin to fund AI infrastructure through USD.AI.

• ECB’s Christine Lagarde shifts focus to digital euro rollout after holding rates.

• Tether launches peer-to-peer password manager PearPass to curb cloud breach risks.

• Macquarie sees U.S. Senate near crypto deal as market structure, GENIUS rules advance.

• Intuit taps Circle’s USDC to add stablecoin payments across TurboTax and QuickBooks.

• World Liberty Financial proposes using treasury funds to boost USD1 stablecoin growth.

• Aave founder charts 'master plan' to trillion-dollar scale as DAO tensions mount, SEC ends 4-year probe.

YIELD OF THE WEEK

Yuzu yzPP: 30% APY

• yzPP functions as a first-loss tranche where depositors take on primary strategy risk in exchange for an enhanced yield partially subsidized by a Reserve Fund.

• The return profile consists of a base yield tied to syzUSD plus an additional yield budget specifically allocated by the protocol.

• By absorbing initial losses through its first-loss mechanism, the yzPP tranche serves as a functional buffer for the broader yzUSD Collateral Pool.

Yuzu syzUSD: 13% APY

• Yuzu yzUSD is an overcollateralized token pegged to the U.S. dollar, utilizing an ERC-4626 "syzUSD" wrapper to enable staking and DeFi composability without changing the underlying asset's rights.

• The protocol sets a weekly target yield every Wednesday, calculating a fixed dollar distribution based on the TVL at the start of each epoch.

• While the dollar distribution is fixed weekly, the actual realized APY fluctuates inversely with TVL changes; a decrease in TVL raises the APY, while an increase dilutes it.

Fluid USDC-WBTC Loop: 4.46% - 28.82% APY

• Fluid enables users to deposit USDC as collateral to borrow WBTC with up to 6.66x leverage, a strategy designed to amplify potential yields.

• The protocol maintains an 85% collateral factor and an 88% liquidation threshold, providing a 3% safety buffer before a position becomes eligible for forced closure.

• In the event of a breach, a 2% liquidation penalty is applied to the position to cover the costs of debt repayment and protocol maintenance.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.