As someone deeply involved in both my community and our local banking ecosystem, I’ve taken a close look at the newly passed GENIUS Act. It appears to have positioned us to be a leader in the fast-growing world of digital assets and cryptocurrencies. However, there’s a flaw in this legislation that could have serious consequences for communities across our commonwealth.

The GENIUS Act aimed to regulate stablecoins in a way that fostered innovation while safeguarding the foundation of our traditional financial systems. While stablecoin issuers are barred from directly offering interest on stablecoins, the legislation does not address third parties that can sidestep the law and offer interest or “rewards.” This workaround is likely to divert substantial deposits away from local banks, thereby weakening their ability to provide loans to people and small businesses. Unlike deposits at community banks, these stablecoins do not fuel local lending to our community.

So, as policymakers shift to legislation regulating exchanges and other digital asset market participants, I hope that policymakers will close this stablecoin interest loophole to ensure that attempts at innovation don’t come at the cost of our community banks and the financial support they provide to our small businesses and neighbors.

John Basial

Harrisburg

The writer is government relations manager with the Pennsylvania Association of Community Bankers.

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