WASHINGTON–With both the Senate Banking Committee and Agriculture Committee expected to mark up sections of the Digital Asset Market Clarity Act (H.R. 3633) starting Thursday, America’s Credit Unions and the Defense CU Council have joined with six other organizations in a letter opposing allowing yield and rewards on payment stablecoins.
America’s Credit Unions noted that, specifically, H.R. seeks to establish a market structure for cryptocurrencies, provide a clear regulatory pathway for credit unions to offer digital commodity custody services, ensure stablecoins cannot be treated as a credit union or bank deposit, and clarify that clear credit unions offering digital asset services are not required to hold assets held in custody as liabilities on their balance sheet.
Offering any kind of compensation to stablecoin holders, including advertised yields, promotional rewards, or interest-like payments, “threaten to drain deposits from regulated institutions, constricting the credit that fuels communities across our great nation,” the letter notes, highlighting Treasury estimates that show $6.6 trillion in deposits could be at risk with such incentives.
‘Destroy Local Lending’
“Every deposit represents a home loan, a small business loan, or an agricultural loan,” the organizations wrote, adding that such policies would “destroy local lending.”
Given the financial services nature of H.R. 3633, America’s Credit Unions said it will also work with members of both committees to ensure no provisions that would harm credit unions—including a 10% cap on credit card interest rates—are not added during the markup process (see related reporting).
The full letter can be found here.
Seeking ‘Parity’
Meanwhile, Greg Mesack, SVP-advocacy with America’s Credit Unions, said the trade group has been “working very hard to ensure credit unions have parity” in financial services-related legislation, beyond just digital assets.
“It’s been a big priority for us. We want to future-proof the credit union charter and make sure the credit unions are able to meet their consumers wherever the future takes us,” he said.
That includes legislation around digital assets, future payments systems and more, he said, to keep credit unions on “equal footing” with banks and other providers, he said.
Mesack said it remains unknown how digital assets will be a part of future payments systems and the broader economy, which is why it is seeking to ensure CUs are on equal footing with banks in order to be prepared for whatever the future might bring.
Time With Committee
Mesack said America’s Credit Unions has been spending considerable time working with the Senate Banking Committee “and we’re optimistic that credit unions will be able to offer innovative digital asset products going forward.”
Similarly, he said the trade group has been engaged with the House Financial Services Committee as it works on its “Make Community Banking Great Again” efforts. Mesack said the committee’s chairman, Rep. French Hill (R-AR), has said in the past that when he refers to “community banking” he includes credit unions under that umbrella. However, when the committee released its Main Street Capital Access Act, credit union trade groups said it came up short win terms of credit union provisions.
Mesack noted America’s Credit Unions’ president and CEO, Scott Simpson, participated in a call last week with Hill staff, “so we’re bringing our priorities to them to ensure that credit unions can continue to thrive.”
‘Last Institution Standing’
“Sometimes, credit unions are the last financial institution standing in small towns,” Mesack added. “We provide more banking justice than any other type of financial institution, so as they’re talking about community banking reform, credit unions have to be part of that discussion. They’ve been very open partners.”
