Keith Kelley, a Republican state senator who represents the 12th Alabama district, sounds an alarm for the potential impact of the federal bill of Stablecoin, the Genius Act, two months after it is signed by US President Donald Trump’s law.
On a Wednesday OP-Ed for 1819 News, Kelley Says There was a loophole in the Genius Act that, if exploited, could “break” the economies of rural areas like many in Alabama.
According to the senator, the bill will allow “cryptocurrency platforms to distribute financial rewards,” which motivates people to remove funds or close accounts to small community banks in the state.
“Unlike large banks, community banks depend on local deposits to fund their lending,” Kelley said. “If deposits decrease, their ability to offer loans to individuals, families, and small businesses is significantly limited.”
He added:
“For our rural farming communities specifically, where margins are skinny and time -consuming cash is critical, the loss of a trusted lending partner can be ruined.”
https://www.youtube.com/watch?v=ry9MI57PBJS
Although signed by law On July 18, the Genius Act will not occur immediately. The law requires the US Treasury and Federal Reserve to terminate the regulations related to the bill – a process that began dating in August of calling for public comments focused on discovering illicit activity.
Related: Banking Lobby fights to change the Genius Act: Is it too late?
The proponents of the Genius Act have The bill has already argued will “drive a change” in the US by establishing the clarity of regulation for stablecoin providers. But others have warned law issues in addition to concerns about stablecoin providers who pay yields indirectly.
“The foreign loophole has not been repaired enough,” Timothy Massad, a fellow research at the Kennedy School of Government at Harvard University and former chairman of the US Commodity Futures Trading Commission (CFTC), told Cointelegraph in August.
Critics claim that the law can put a US based on Those who gave stablecoin in a lack of competitive to foreigners by creating restrictions policies. Genius allows stablecoin foreign runs to run in the US if they are subject to a “comparable” regulation and regime administration – without clearly defining the “comparable,” according to the massad.
Banking groups also sound alarm to genius ‘loophole’
The loophole in which the Alabama state senator determined to arise from a provision Says That: that:
“No stablecoin provider or foreign payer pays to pay for any form of interest or yield (whether in cash, token, or other consideration) related to the handling, use, or maintenance of such stablecoin.”
However, the text of the bill does not clearly state that stablecoin issues cannot use cryptocurrency exchanges or affiliates to offer yields, which potentially prevent the law.
“Allowing these cryptocurrency companies to operate like banks, offering rewards or yield-carrying products, without asking them to play the same policies is not innovative ideas,” Kelley said. “It is a regulation of arbitration, and it puts the livelihood of American families and our local economies at risk.”
In August, the Bank Policy Institute Echoed similar concerns In genius, the claim of law can lead to $ 6.6 trillion in deposits from traditional banks, which interfere with credit flow to communities that rely on it.
The timing of Kelley’s concerns was unclear, given months since Republicans in the US House of Representative and Senate began to formulate law and about two months since the genius was signed by law.
Cointelegraph handed the Alabama senator to comment, but did not receive a response at the time of publication.
Magazine: The Genius Act reopened the door for a meta stablecoin, but would it work?
