WASHINGTON — It’s been less than a week since NCUA announced a proposal around issuing stablecoins, and while America’s Credit Unions said it’s still digging through what NCUA has proposed, greater direction has been provided, including what appears to be clarifications around an earlier NCUA plan.
As the CU Daily reported here, NCUA has announced a Notice of Proposed Rulemaking outlining the operational and risk management standards for an NCUA-licensed permitted payment stablecoin issuer, as outlined in the GENIUS Act.
The proposed rule is currently available for review in the Federal Register, where stakeholders will be able to submit comments.
As noted by Andrew Morris, director of innovation and technology with America’s Credit Unions, the newest proposal from the agency is actually the second related to stablecoins that it has issued.
How the Second Proposal Differs
“The first one was very much focused on the licensing process of the credit union parent and the subsidiary issuer and kind of the mechanics of the application,” Morris stated. “The second proposal is much more substantively concerned with how the issuer complies with the various capital, liquidity and reserve requirements.”
Morris said the trade group is still reviewing the proposal and will file a comment within the 60-day window.
But in his initial review, Morris said, “I think, right off the bat, it’s in pretty close alignment with the statutory criteria, so no big surprises. What was a nice addition for this proposal, which is nominally concerned with stablecoins, is the NCUA’s willingness to talk about tokenized deposits or tokenized shares and clarifying that nothing in the GENIUS Act would limit or be construed to limit the authority of a federally insured credit union to engage in activities permissible under state and federal law for accepting or receiving deposits or digital assets that might represent those deposits. I think that is a helpful clarification.”
Morris said he believes the new proposal brings credit unions closer to some of what is taking place on the developmental stage in the banking industry in terms of tokenization of deposits.
What Credit Unions Want to Know
Asked by the CU Daily which questions or specific issues America’s Credit Unions has heard from credit unions related to tokenization and stablecoins, Morris responded that the first NCUA proposal generated a lot of questions around what credit unions can expect as far as the supervisory handling of custodial treatment of stablecoins outside of the issuing process.
“So, let’s say a credit union doesn’t have any interest in issuing its own stablecoin, but would like to set up some custodial facility for it,” said Morris. “The second proposal gets into that. I think we’re seeing NCUA already clarifying some of those kind of earlier questions that some of our members had who weren’t necessarily ready to dive into the deep end as far as the issuing process.”
SBA Announces 50% Increase in Program
Separately, the Small Business Administration (SBA) has announced a new rule to allow eligible borrowers to combine their 7(a) and 504 loans for up to $10 million in SBA-backed financing, a 50% increase, according to America’s Credit Unions.
The change takes effect July 4.
Under the new policy, qualified borrowers who secure a 7(a) loan first may access up to $5 million through the 7(a) loan program and up to $5 million through the 504 loan program, for a combined total of $10 million in SBA-backed financing.
“Loans made under the 7(a) program can be up to 85% guaranteed by the government, with the guaranteed portion not counting against a credit union’s member business lending cap of 12.25% of assets,” America’s Credit Unions said. “The 504 loan program provides long-term, fixed-rate financing for major fixed assets that promote business growth and job creation.
