Banks and financial industry associations have submitted recommendations to the U.S. Department of the Treasury regarding the implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). The Bank Policy Institute (BPI), American Bankers Association, Consumer Bankers Association, Financial Services Forum, and The Clearing House Association jointly responded to an Advance Notice of Proposed Rulemaking from Treasury.
Their submission urges Treasury to create regulations that maintain the intended benefits of payment stablecoins in payments and settlements while avoiding unnecessary risks for consumers, competition, credit availability, illicit finance, or financial stability.
“The GENIUS Act is a major legislative achievement that, if implemented effectively, can strengthen America’s financial competitiveness,” the associations stated upon filing the letter. “We are confident that Treasury is carefully considering how to craft regulations that mitigate potential risks associated with these instruments while faithfully implementing Congress’s intent that payment stablecoins function as payment instruments. We recognize the complexity of developing these rules and look forward to engaging with Treasury and the federal banking agencies throughout the rulemaking process.”
The associations outlined several recommendations in their letter:
- Regulations should implement Congress’s prohibition on stablecoin issuers paying interest or yield, extending this ban to digital asset service providers such as exchanges.
- To prevent regulatory arbitrage, they advocate for consistent regulation across federal, state, and foreign regimes so all entities conducting similar activities are subject to equivalent standards.
- Strict safeguards against illicit finance should be enforced uniformly among stablecoin issuers, digital asset service providers, and banks.
- The groups call for reaffirming the separation between banking and commerce by ensuring that public or foreign companies not primarily engaged in financial activities cannot issue payment stablecoins.
- They recommend tighter requirements for disclosures about reserves backing stablecoins and high standards for custody and safekeeping to protect customers and preserve market integrity.
- Consistent consumer protections should apply to both stablecoin issuers and payment stablecoins in line with those governing other payment institutions.
- The associations also seek clarification of statutory definitions around terms like “payment stablecoin” and “digital asset service provider” to avoid regulatory loopholes.
The Bank Policy Institute describes itself as a nonpartisan organization representing universal banks, regional banks, and major foreign banks operating in the United States. It conducts research on regulatory topics and advocates on issues such as cybersecurity.
The American Bankers Association represents a broad range of banks nationwide. According to its data, these institutions employ over two million people in the U.S., hold nearly $20 trillion in deposits, and provide more than $13 trillion in loans.
The Consumer Bankers Association represents leading retail banks whose members support 1.7 million jobs in America. Its member institutions extend about $4 trillion in consumer loans annually along with $275 billion in small business loans.
The Financial Services Forum includes eight large diversified U.S.-based financial institutions focused on economic policy advocacy supporting savings, investment, inclusion, capital markets competitiveness, and system soundness.
The Clearing House Association is described as the country’s oldest banking trade association providing advocacy on payments-related issues; its affiliate company operates key payments infrastructure clearing over $2 trillion daily.