Joint Letter to Federal Stablecoin Regulators re Sec 15(a) Reporting Requirement

Dear Comptroller Gould, Vice Chair Bowman, Chairman Hill, and Chairman Hauptman:

The American Bankers Association, the Bank Policy Institute, the Consumer Bankers Association, and the Independent Community Bankers of America (the “Associations”) write in regard to the report required under Section 15(a) of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. This provision requires the primary Federal payment stablecoin regulators to annually submit to the Committee on Banking, Housing, and Urban Affairs of the Senate; the Committee on Financial Services of the House of Representatives; and the Director of the Office of Financial Research a report on the payment stablecoin industry that includes, among other things, “a description of the potential financial stability risks posed to the safety and soundness of the broader financial system by payment stablecoin activities.”

We are deeply concerned about the potential risks that payment stablecoin issuers and their activities pose to the larger financial system. We include recommendations herein regarding payment stablecoin activities that should be included in the report to Congress. The report should include, at a minimum, an assessment of the following risks:

• The vulnerability of payment stablecoin issuers to runs;
• The contagion risk from the rapid redemption of payment stablecoins both within and outside the stablecoin industry;
• The effect of yield-like arrangements on stablecoin growth and the reduction in the availability of credit due to such growth;
• The risks from stablecoin lending; and
• The risks from the GENIUS Act’s multi-regulator framework creating opportunities for regulatory arbitrage that, left unaddressed, could concentrate risk in less-supervised corners of the payment stablecoin market and undermine financial system safety and soundness.

We also note that the primary federal payment stablecoin regulators are at various stages of implementing rulemakings pursuant to the GENIUS Act, a wholly new statute that is the first federal legislation governing payment stablecoins. The primary Federal payment stablecoin regulators should use the analysis undertaken to produce the annual report to inform potential amendments to their respective regulations governing payment stablecoin issuers and the overall ecosystem. As risks become apparent, the regulators should update their regulations to help ensure they are appropriately addressed thereunder. In some cases, other policymakers, including Congress and other agencies, such as the Treasury Department, may need to take action to help address the risks posed by stablecoins.

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