REGULATORY SHAKEUP FOR DIGITAL DOLLARS By Michael A. Johnson, SVP & Southwest Regional Manager, PCBB After years of uncertainty surrounding digital assets, the GENIUS Act finally provides banks with a clear, regulated path to use stablecoins safely. For community banks, this means the conversation can shift from “if” to “how.” The law requires all dollar-backed stablecoins to be fully collateralized with U.S. currency or Treasuries, subject to monthly reserve audits and supervised at the state or federal level. Marketing stablecoins as legal tender or as government-insured products is now strictly prohibited. Oversight under the GENIUS Act is shared; certain permitted issuers fall under the OCC or state-level regulatory regimes, depending on their structure and whether they elect to be supervised by a federal or state authority. Issuers must also meet federal requirements regarding anti-money laundering compliance, consumer protection and financial stability. For community banks, this framework provides greater clarity in evaluating the integration of stablecoins into payments, settlement and liquidity functions within defined regulatory guardrails. Large institutions are already adapting. Stripe’s subsidiary, Bridge, along with Circle, Ripple and Paxos, has applied for national trust bank status, signaling that stablecoin issuers are moving toward federally supervised models. U.S. Bank has formed a “Digital Assets and Money Movement” division to manage tokenized payments and custody functions. While community banks aren’t expected to launch divisions of their own, these moves set the stage for future partnerships — giving community institutions new, compliant ways to connect to these rails. Risk Management: A Familiar Discipline Adopting stablecoins is not risk-free, especially for traditional lenders and deposit-takers. However, many of the safeguards that financial institutions already use — such as vendor 18
RkJQdWJsaXNoZXIy MTg3NDExNQ==