The GENIUS Act, which crafted a regulatory framework for stablecoin issuers, prohibited payment stablecoin issuers from paying yield, interest or other considerations to stablecoin holders.  However, entities are already evading this requirement by marketing payment of “rewards” and paying interest indirectly to stablecoin holders through crypto exchanges and other third parties that were not the focus of the GENIUS Act.  This could incentivize outflows of deposits to stablecoins and reduce access to credit by allowing payment stablecoins to compete with bank deposits without being subject to the same regulatory oversight and safeguards as a bank.

The Senate’s market structure legislation could address this issue by extending this prohibition to all digital asset market participants.  Senators need to hear how your deposits support your community and why it is important they protect against deposit flight. 
 

We also need your help in asking Senators to:
 

• Repeal section 16(d) of the GENIUS Act, thereby protecting consumers and competition by guaranteeing state banking authorities have the power to supervise out-of-state chartered uninsured depository institutions, which ensures a level playing field for all institutions operating within their borders. 
• Prohibit non-financial companies from issuing stablecoins, restricting their ability to siphon deposits from local banks and therefore preserving local community access to credit and preventing the concentration of economic power and threats to the safety and soundness of the U.S. financial system. 

Please ACT Now to ask your Senators to implement these key recommendations in the Responsible Financial Innovation Act or other legislation.