The FDIC is considering establishing guidelines for tokenized deposit insurance, as traditional banks accelerate their embrace of blockchain.

In November 2025, Travis Hill, Acting Chairman of the Federal Deposit Insurance Corporation (FDIC), revealed at a meeting of the Federal Reserve Bank of Philadelphia that the agency is developing guidelines for tokenization of deposit insurance, clarifying the regulatory principle that “a deposit is a deposit.” This position means that deposits held by banks through blockchain or Distributed Ledger technology will enjoy the same insurance protection as traditional deposits, clearing key obstacles for Financial Institutions to expand their digital asset business, while further clarifying the regulatory differences between tokenized deposits and stablecoins.

Regulatory Positioning and Insurance Scope of Tokenized Deposits

The core of the FDIC's guidelines is the continuity of legal nature—regardless of the technological form in which deposits exist, their legal essence remains unchanged. Travis Hill emphasized: “Moving deposits from the traditional financial world to the Blockchain or Distributed Ledger world should not alter their legal nature.” This position provides certainty for banks exploring Blockchain applications, avoiding the loss of deposit insurance protection due to technology choices. According to current rules, the FDIC provides insurance coverage of up to $250,000 for each account, and this limit also applies to tokenized deposits.

The key difference between tokenized deposits and stablecoins lies in the issuing entity and legal structure. Tokenized deposits are digital representations of bank liabilities, enjoying full insurance and all safety guarantees provided by the bank, while stablecoins are typically issued by non-bank entities, with value depending on the quality of collateral assets. This distinction is crucial for consumer protection—if the stablecoin issuer goes bankrupt, holders are merely ordinary creditors, whereas tokenized deposit holders are protected by FDIC insurance. Brian Brooks, former Acting Comptroller of the Currency (OCC), stated: “This clarity will encourage banks rather than tech companies to lead the next phase of financial innovation.”

Deposit Insurance Fund Status and System Stability

The FDIC's Deposit Insurance Fund (DIF) is the cornerstone of the U.S. financial system, designed to protect depositors in the event of a bank failure. The fund primarily comes from quarterly assessment fees paid by insured banks, and in recent years, the reserve ratio fell below the statutory requirement due to a surge in deposits. However, the FDIC stated earlier this year that the fund is expected to reach the statutory target ratio by the end of 2025—about three years ahead of the original schedule.

This positive development provides a buffer for the FDIC to expand its insurance coverage into innovative areas. As of the third quarter of 2025, the DIF balance has exceeded $150 billion, with a reserve ratio of 1.35%, above the statutory minimum requirement of 1.35%. The healthy fund status enables the FDIC to assume insurance responsibilities for tokenized deposits without increasing bank assessment fees, avoiding additional burdens on the industry. This fiscal robustness is crucial for maintaining public confidence, especially in the early stages of introducing new technologies that may be accompanied by uncertainty.

FDIC Deposit Insurance Fund Key Indicators

• Current balance: 150 billion USD+
• Reserve Ratio: 1.35% (Qualified)
• Legal minimum requirement: 1.35%
• Target completion time: by the end of 2025 (three years ahead)
• Individual account insurance limit: 250,000 USD
• Fund Source: Insured Bank Quarterly Assessment Fee

The New Competitive Landscape Between Banks and Fintech Companies

The FDIC's stance may reshape the competitive landscape between banks and fintech companies in the digital asset space. Currently, many fintech companies provide “pass-through” deposit insurance by partnering with FDIC-insured banks, but this arrangement faces challenges when issues arise with third parties. Clear guidelines on tokenization deposit insurance will give banks a significant competitive advantage in the digital asset space, as they will be able to offer insurance protection directly rather than relying on complex partnership structures.

Industry observers believe that this move may accelerate banks' deployment of blockchain technology. JPMorgan has processed over $600 billion in transactions through its JPM Coin system, and Citibank and Bank of New York Mellon are also testing similar solutions. The FDIC's clear guidance provides regulatory certainty for these projects, encouraging more investment. Jason Black, Chief Digital Officer of the Bank Policy Institute, stated: “This addresses the biggest concern banks have in exploring blockchain applications—regulatory uncertainty. We expect a large number of new products to be launched in the next 18 months.”

Market Application Prospects of Tokenization Deposits

On a technical level, tokenization of deposits can play an important role in multiple scenarios. In the wholesale financial sector, interbank settlement may shift from the current delayed net settlement system to near real-time Blockchain settlement, improving efficiency and reducing risk. In the retail sector, consumers may hold bank tokenized deposits directly through digital wallets, enjoying instant payment functionality while not having to worry about the risk of bank failures.

Corporate treasury management is another important application scenario. Multinational companies can utilize tokenization of deposits to achieve cross-border payments and cash management, avoiding delays and high fees associated with traditional banking systems. Visa and Mastercard have announced plans to integrate bank-issued tokenized deposits into their payment networks, which could bring the benefits of Blockchain technology to everyday shopping, without consumers even noticing the underlying technological changes. This seamless integration is key to large-scale adoption.

The Critical Point of Integration Between Traditional Finance and Blockchain

The FDIC's preparation to formulate guidelines for tokenized deposit insurance could become a historic turning point in the integration of traditional finance and blockchain technology. When regulators no longer view technology as a threat but as a tool, and when banks embrace rather than avoid due to fear, the evolution of the financial system enters a new phase. The unique advantage of tokenized deposits is that it neither forces consumers to choose between traditional security and technological innovation nor requires banks to compromise between regulatory compliance and efficiency improvement. In this balance, we may be witnessing the birth of a new financial paradigm—one that retains the stability and trust of the traditional system while incorporating the efficiency and transparency of blockchain.