WASHINGTON--Responding to the NCUA’s first proposed rule implementing the GENIUS Act, America’s Credit Unions recommends NCUA consider flexible approaches to expand credit union participation in stablecoin markets.
Specifically, the proposal implements the statutorily required process for approval and licensure of permitted payment stablecoin issuers (PPSIs) subject to the NCUA’s jurisdiction. Director of Innovation and Technology Andrew Morris, in a letter to the agency, offered support for the proposal’s general clarification around joint applications for licensed NCUA-PPSIs. It’s likely that in the near-term, credit union issuing activity will occur through industry consortia backing larger PPSIs, rather than each credit union rolling out its own branded stablecoin using a white-label model.
To be consistent with Congress' intent, Morris also recommended the agency consider flexibility in allowing federal credit unions to invest in PPSI subsidiaries that are distinct from credit union service organizations (CUSOs).
The letter recommended tailored rules for PPSIs, specifically modifying or waiving certain CUSO requirements that may be ill-suited to stablecoin activities.
Additional suggestions outlined in the letter include:
- Clarifying that PPSI reserves pledged by owner credit unions would not count against the 1% cap applicable to CUSO investments
- Addressing the NCUA’s expectations for credit unions that engage in custodial activities but do not plan to issue a permitted payment stablecoin
- Offering additional regulatory guidance on mixed-ownership PPSIs, corporate credit union roles, and coordination with other federal regulators
The letter also cautioned against including discretionary evaluation factors, such as market strength and profitability expectations that could disadvantage smaller credit unions or limit consortium participation.
Acknowledging that many recommendations may be further clarified or addressed in rulemakings to come, Morris requested the agency coordinate rulemaking efforts with other federal banking regulators to assure all proposals necessary to implement the GENIUS Act can be reviewed concurrently before final rules are issued.