Banks Submit Recommendations on Treasury’s Implementation of the GENIUS Act

Washington, D.C. - BPI, the American Bankers Association, Consumer Bankers Association, Financial Services Forum and The Clearing House Association responded late yesterday to a U.S. Department of the Treasury Advance Notice of Proposed Rulemaking on its implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS) Act. The submission asks Treasury to develop regulations that preserve the benefits of payment stablecoins for their intended use in payments and settlements, without causing undue risks for consumers, other stablecoin holders or users, 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 made several initial recommendations in their letter:

1. Implement Congress's intent to prohibit stablecoins from paying interest or yield. Congress broadly prohibited the payment of interest or yield by stablecoin issuers in GENIUS. That prohibition should be extended to digital asset service providers, such as exchanges and affiliates.
2. Prevent regulatory arbitrage. Same activity, same regulation. Treasury should consider federal, state, and foreign payment stablecoin regulatory regimes so that stablecoin issuers are held to the same rules required of any other financial institution engaged in equivalent activities.
3. Enforce strict illicit finance safeguards. Combatting illicit finance requires common standards that are strictly enforced. Treasury should hold all entities engaged in the same activities to the same standards, including stablecoin issuers, digital asset services providers, and banks.
4. Reaffirm the longstanding separation of banking and commerce. The U.S. has maintained a longstanding policy of separating banking and commercial activities to prevent the emergence of associated risks, including undue concentration of economic power. The GENIUS Act prohibition on payment stablecoin issuance by public or foreign companies not predominantly engaged in financial activities should be implemented in a manner that continues that policy.
5. Tighten safeguards to preserve trust and prevent conflicts of interest. Stablecoin issuers should provide clear disclosures, including regarding the reserves backing their stablecoins. They must also uphold the highest standards for custody and safekeeping to protect customers, maintain market integrity, foster confidence, and minimize conflicts of interest.
6. Apply consistent consumer protections. Stablecoin issuers and payment stablecoins must be subject to the same robust consumer protections applicable to other institutions and products that similarly facilitate payments and settlement.
7. Clarify statutory definitions. Help create common definitions and standards for what constitutes a "payment stablecoin," "digital asset service provider," "foreign payment stablecoin issuer," and other novel terminologies to mitigate the risk of regulatory arbitrage and evasion.

To access a copy of the associations' response, please click here.

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About Bank Policy Institute

The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.

About American Bankers Association

The American Bankers Association is the voice of the nation's $25 trillion banking industry, which is composed of small, regional and large banks that together employ approximately 2.1 million people, safeguard $19.7 trillion in deposits and extend $13.1 trillion in loans.

About Consumer Bankers Association

The Consumer Bankers Association represents America's leading retail banks. We promote policies to create a stronger industry and economy. Established in 1919, CBA's corporate member institutions account for 1.7 million jobs in America, extend roughly $4 trillion in consumer loans and provide $275 billion in small business loans annually. Follow us on X @consumerbankers.

About Financial Services Forum

The Financial Services Forum is an economic policy and advocacy organization whose members are the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, financial inclusion, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.

About The Clearing House Association

The Clearing House Association L.L.C., the country's oldest banking trade association, is a nonpartisan organization that provides informed advocacy and thought leadership on critical payments-related issues. Its sister company, The Clearing House Payments Company L.L.C., owns and operates core payments system infrastructure in the U.S., clearing and settling more than $2 trillion each day.

Media Contacts

• Austin Anton, Bank Policy Institute, [email protected]
• Sarah Grano, American Bankers Association, [email protected]
• Billy Rielly, Consumer Bankers Association, [email protected]
• Laura Peavey, Financial Services Forum, [email protected]
• Greg MacSweeney, The Clearing House Association, [email protected]