This week the Conference of State Bank Supervisors (CSBS) provided rulemaking feedback to the Treasury regarding the GENIUS Act stablecoin legislation. Several responses touch on controversial issues in the GENIUS Act including the payment of interest or rewards, which activities stablecoin issuers can perform and which non-financial companies should be allowed to issue stablecoins. Separately, the CSBS wrote to the federal banking regulators requesting the publication of joint federal and state guidance on tokenized deposits.
“Stablecoin and tokenized deposit efforts should proceed in tandem,” said CSBS President and CEO Brandon Milhorn. “All financial institutions that choose to innovate – from community banks to stablecoin issuers – should have the benefit of regulatory clarity so they can bring responsible blockchain-based financial products to market.”
On the stablecoin front, the state regulators are concerned that federal regulators might be overly permissive and interpret aspects of the GENIUS Act too broadly. The Treasury asked whether the digital asset service provider description was sufficient, triggering fears among state regulators that federal stablecoin issuers could be allowed to take on all the roles of a digital asset service providers, which includes functioning as a crypto exchange.
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