According to Bloomberg, the Federal Deposit Insurance Corporation (FDIC) has proposed new regulations aimed at tightening the rules surrounding brokered deposits. These deposits, often referred to as 'hot money,' have been a point of concern due to their potential to serve as a quick fix for troubled financial institutions.

The FDIC's proposal, unveiled by Chair Martin Gruenberg, seeks to impose stricter requirements on third parties, including fintech and cryptocurrency firms, to demonstrate the nature of their business relationships with banks. Under the current regulations, banks can exempt a third party from the deposit-broker label if less than 25% of the intermediary’s total customer assets under administration in a particular business line are held at insured lenders. The new proposal would lower this threshold to 10%, thereby increasing the number of intermediaries that would need to apply for permission to avoid the broker label.

Gruenberg emphasized that the proposed changes would eliminate the unrestricted reliance on unaffiliated third-party placed deposits, requiring no application or notice under the current system. The FDIC's move aims to enhance the stability and transparency of the banking sector by ensuring that more intermediaries are subject to regulatory scrutiny.