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Blockchain software giant Consensys has urged regulators to adopt technology-neutral stablecoin rules under the GENIUS Act, warning that overly broad restrictions could stifle innovation in decentralized finance (DeFi), cross-chain interoperability, and self-custodial software development.
In a detailed comment letter submitted to the Federal Deposit Insurance Corporation (FDIC), Consensys outlined a series of recommendations aimed at refining the agency’s proposed framework for payment stablecoin issuers.
The filing comes as regulators continue implementing the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
One of Consensys’ biggest concerns centers on the FDIC’s proposed interpretation of the GENIUS Act’s prohibition on stablecoin yield payments.
Under the law, permitted payment stablecoin issuers are barred from paying holders interest or yield simply for holding stablecoins. However, the FDIC proposal would extend that restriction to “related third parties” through a rebuttable presumption framework.
Consensys argued that this interpretation exceeds the scope of the statute and could unfairly impact legitimate distribution partners and commercial relationships.
“The statute speaks to the issuer’s payment relationship with the holder,” the company wrote in the letter, adding that independent distribution partners providing incentives to users should not automatically fall under the same prohibition.
Consensys argued regulators should not expand the law’s yield restrictions beyond what Congress explicitly approved.
Consensys warned that the FDIC’s proposed “clear and convincing evidence” standard for rebutting the presumption would be nearly impossible for many businesses to satisfy in practice.
The Ethereum-focused software firm also defended non-custodial wallet software and DeFi interfaces, arguing that these tools should remain outside the scope of stablecoin yield restrictions.
Consensys argued that regulating non-custodial interfaces as if they were yield distributors for issuers would conflict with the GENIUS Act’s explicit carve-out for self-custodial software interfaces.
A major theme throughout the filing was the need for technology-neutral regulation.
Consensys urged the FDIC to avoid definitions that give regulatory preference to either public or permissioned blockchains. Instead, the company said regulators should focus on functional characteristics such as resilience, auditability, governance, settlement finality, and supervisory visibility.
Consensys also urged regulators to adopt flexible, technology-neutral smart contract definitions.
“A definition tied to any of these elements would create regulatory dependencies on technical implementation choices that evolve rapidly,” Consensys warned.
Consensys also addressed cross-chain stablecoin representations, recommending that regulators distinguish between native tokenized stablecoins, wrapped assets, bridge receipts, and synthetic derivatives based on their legal structure rather than their technological design.
The firm argued that blanket rules targeting all cross-chain representations equally could create confusion and hinder interoperability innovation.
The company additionally backed the FDIC’s more flexible stance on multi-brand stablecoin issuance, contrasting it with the Office of the Comptroller of the Currency’s (OCC) more restrictive approach.
The FDIC proposal would allow a single permitted payment stablecoin issuer to support multiple branded stablecoins, provided reserves remain properly segregated.
Consensys said flexible multi-brand issuance could improve efficiency while maintaining reserve protections.
The firm also supported allowing issuers to use excess reserves across different brands, as long as each individual stablecoin maintains adequate reserve backing.
While criticizing some aspects of the proposal, Consensys praised the FDIC’s discretionary approach toward reserve shortfalls, redemption surges, and capital deficiencies.
Consensys praised the FDIC’s case-by-case supervisory approach over more rigid alternatives.
Consensys argued that rigid mandatory rules could create destabilizing “cliff-edge dynamics” and encourage gaming behavior among sophisticated market participants.
“The appropriate supervisory response will depend on the cause of the shortfall, the issuer’s remediation plan, the broader market context, and the interests of stablecoin holders,” the company wrote.
The comment letter highlights growing industry concern over how regulators will interpret and enforce the GENIUS Act as federal stablecoin oversight moves closer to implementation.
The company concluded by urging the FDIC and OCC to coordinate closely and adopt a unified, innovation-friendly framework that supports blockchain interoperability, self-custody, and open financial infrastructure.
“We appreciate the FDIC’s earnest engagement with the GENIUS Act implementation,” Consensys said, describing the filing as “the start of a conversation” about the future of US stablecoin regulation.
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