Alabama state senator warns that the GENIUS Act could harm small banks.

Keith Kelley, a senator from Alabama, warned that the federal stablecoin GENIUS Act could harm community banks and the rural economy. He argued that loopholes in the law allow cryptocurrency platforms to distribute financial rewards, causing people to withdraw money from small banks that rely on deposits for lending. This could limit the ability to extend credit to households and small businesses, particularly heavily impacting agricultural communities.

The GENIUS Act was signed by President Donald Trump on July 18 but has not yet taken effect, awaiting regulations from the Treasury Department and the Fed. While it has been praised for promoting innovation and creating a legal framework for stablecoins, many experts and banking groups are concerned that this loophole gives an advantage to foreign issuers and poses a risk of causing the loss of trillions of USD in deposits from the U.S. banking system.