The Kansas City Federal Reserve is studying the cost of stablecoin insurance

The Federal Reserve Bank of Kansas City study found that stablecoin insurance costs are higher than bank deposit insurance. The average annual insurance cost for the four unnamed stablecoins has been 3.2% since 2019, but has dropped below 1% over the past year, compared to bank FDIC insurance costs of 2.5 to 42 basis points. Stablecoins are more volatile in price and issuance, and have a smaller capital buffer, averaging just 0.9%. Nonetheless, the insurance costs can be covered by stablecoin reserve interest.