The newly enacted GENIUS Act in Alabama has sparked active discussions regarding its impact on local financial institutions.
Senator Kelly's Concerns
Alabama State Senator Keith Kelley expressed concerns that the new GENIUS Act could inadvertently harm local banks. He noted that these financial institutions are essential to small-town economies, providing loans to farmers, small businesses, and families who often cannot access funding from larger banks.
Loophole in the GENIUS Act
The debate centers around a potential loophole in the GENIUS Act, which forbids stablecoin issuers from paying direct interest on holdings but does not restrict crypto platforms from offering yield-like benefits. This technological gap may enable digital platforms to siphon deposits away from local banks, promising better yields under a different guise.
Federal Reactions
The discussion surrounding the GENIUS Act extends beyond Alabama. Industry experts and former regulators have raised concerns that ambiguous terms like 'comparable regulatory regime' could allow overseas issuers to evade U.S. oversight. This could create an uneven playing field for domestic banks.
The GENIUS Act quickly becomes one of the most contentious pieces of financial legislation in 2025. While the intention was to establish a clear framework for stablecoin usage, detractors believe it may undermine community banking.
