ICBA urged the OCC to strengthen its proposed GENIUS Act rules to protect against the risks stablecoins pose to community bank lending capacity, consumers, and financial stability.
ICBA Recommendations: In a letter to the OCC, ICBA said the agency must:
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Minimize the negative impacts of stablecoins on community banks and credit to local communities.
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Minimize deposit flight and the impact on credit creation.
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Clarify key definitions to prevent regulatory gaps and protect end users.
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Establish strong consumer protection guardrails for payment stablecoins.
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Foster safety and soundness of payment stablecoin issuers.
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Place appropriate operational limits on permitted payment stablecoin issuers.
ICBA Analysis: ICBA also provided a detailed economic analysis that says:
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Community banks could lose more than $1 trillion of deposits in the coming years as customers move payments to payment stablecoins, resulting in a decline in community bank lending of at least $850 billion.
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Recycled wholesale deposits from payment stablecoin issuers cannot make up for lost retail deposits at community banks, which will harm access to credit in local communities.
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The ultimate impact of stablecoin adoption at-scale would be a more concentrated U.S. banking system.
GENIUS Act Proposals:
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FinCEN and OFAC last month issued a joint proposed rule to implement the GENIUS Act’s anti-money laundering and sanctions compliance program requirements.
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An FDIC proposed rule would establish a prudential framework for FDIC-supervised payment stablecoin issuers under the GENIUS Act.
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In a separate Treasury Department proposed rule to implement GENIUS Act policies on state-level regulatory regimes, Treasury said the OCC’s rule will serve as a key component of the federal regulatory framework.
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The FDIC in December proposed a rule to establish GENIUS Act procedures for the agency to accept and process payment stablecoin issuer applications from FDIC-supervised banks, with comments due May 18 following an ICBA-advocated extension.
ICBA Principles: ICBA in November sent key principles for payment stablecoin supervision in a letter to the Treasury Department regarding implementation of the GENIUS Act.
