WASHINGTON—The Defense Credit Union Council and America’s Credit Unions have joined a coalition of national trade associations representing thousands of community banks and credit unions in urging Congress to take immediate action to close a stablecoin loophole that could divert trillions of dollars from local lending institutions and weaken community-based credit nationwide.
The Senate Banking Committee and Agriculture Committee are expected to mark up sections of the Digital Asset Market Clarity Act (H.R. 3633) starting Thursday. H.R. 3633 would establish a market structure for cryptocurrencies, provide a clear regulatory pathway for credit unions to offer digital commodity custody services, ensure stablecoins cannot be treated as a credit union or bank deposit, and clarify that credit unions offering digital asset services are not required to hold assets held in custody as liabilities on their balance sheet.
In a joint letter sent to the U.S. Senate, the CEOs of the American Bankers Association, America’s Credit Unions, the Association of Military Banks of America, the Community Development Bankers Association, DCUC, Inclusiv, the Independent Community Bankers of America, and the National Bankers Association called on lawmakers to strengthen pending crypto market structure legislation. The groups warn that recent market practices allowing stablecoin-related inducements, such as yields, rewards, or interest-like payments, threaten to siphon deposits away from regulated community banks and credit unions.
“Community banks and credit unions rely on deposits to fuel mortgages, small business loans, agricultural lending, and financial services that directly support military families and local communities,” said Anthony Hernandez, DCUC president/CEO. “Allowing stablecoins to function as investment vehicles rather than payment tools undermines the very foundation of local lending and financial readiness.”
The letter notes that while Congress previously prohibited interest payments on stablecoins under the GENIUS Act, indirect arrangements with exchanges and affiliated entities have weakened that safeguard. Without clear statutory language closing this loophole, the coalition warns that deposit-funded lending could be significantly disrupted.
“This is not an abstract policy debate; this is about real consequences for consumers,” said Jason Stverak, DCUC chief advocacy officer. “When deposits leave regulated institutions, credit unions are forced to scale back lending, and consumers, especially younger servicemembers and underserved populations, are pushed toward higher-risk, less-regulated financial alternatives.”
The coalition urged Congress to adopt a comprehensive prohibition on all stablecoin inducements, whether paid directly by issuers or through affiliated platforms, to preserve stablecoins strictly as payment instruments and protect the financial infrastructure that supports communities across the country.
“Every deposit represents a home loan, a small business loan, or an agricultural loan,” the organizations noted, and these policies would “destroy local lending.” Given the financial services nature of H.R. 3633, America’s Credit Unions said it will also work with members of both committees to ensure no provisions that would harm credit unions—including a 10% cap on credit card interest rates—are not added during the markup process.