Alabama Lawmaker Raises Alarm On GENIUS Act’s Impact On Small Banks

Alabama State Senator Keith Kelley has warned that the GENIUS Act , signed into law on July 18, 2025, could trigger a wave of deposit outflows that would hurt rural community ￰1￱ to reports , Kelley set out his concerns in an op-ed for 1819 News, arguing that a perceived gap in the law could let crypto platforms offer yields or rewards that pull funds away from local ￰2￱ warning comes as public comment periods have already opened at the US Treasury, and regulators are expected to write the rules that make the new law ￰3￱ Act: Senator Warns Of Deposit Flight Financial experts say the worry centers on how “comparable supervision” will be ￰4￱ foreign or nonbank stablecoin issuers are treated as having comparable oversight when regulators’ rules are loose, depositors could be tempted to shift cash to higher returns offered by crypto firms.

Alabama’s ￰5￱ Kelley warns the GENIUS Act could devastate rural banks by shifting ￰6￱ stablecoin regulation hurting communities? #GENIUSAct #Stablecoin #CryptoLaw ￰0￱ ￰7￱ — 4C by 360Trader (@4cby360) September 11, 2025 One estimate cited by banking groups puts potential deposit outflows as high as $6.6 trillion if the law is interpreted ￰8￱ number has made small bank leaders ￰9￱ fear losing the stable deposits they use to lend to families, farmers, and local businesses. A Rural Banking Crisis In The Making Many community banks operate on thin ￰10￱ rely on local deposits to underwrite loans for crop seasons, equipment purchases, and small ￰11￱ on reports, Kelley warned that those lifelines could be weakened if large sums move to new digital products outside the traditional banking ￰12￱ and small business owners were named as especially vulnerable, because local lenders often offer terms tailored to seasonal ￰13￱ Act & Regulatory Path Ahead The GENIUS Act is not yet in force in any operational ￰14￱ will depend on rulemaking by the US Treasury and the Federal Reserve, and those agencies have already asked for public input on the risks and anti-money laundering ￰15￱ have disclosed that some banking groups and lawmakers want tighter definitions and clearer guardrails before the rules are ￰16￱ of the law argue it could bring more clarity to stablecoin markets, but opponents say that the details matter ￰17￱ deposits start to leave, small banks could be forced to cut back on loans or raise rates to retain ￰18￱ outcome would likely shift credit away from local borrowers toward larger financial ￰19￱ image from Brian Lyman/Alabama Reflector, chart from TradingView