Credit Unions To Enter Stablecoin Market As US Regulators Bypass Stalled Congress

On 12 Feb, the agency issued a proposed rule to license and regulate payment stablecoin issuers that operate as subsidiaries of federally insured credit unions.

The move represents a massive entry point for digital assets into the traditional financial system. The NCUA oversees more than 4,500 institutions holding approximately $2.4tn in assets. By moving forward now, the agency is ensuring that credit unions aren't left behind as the implementation of the GENIUS Act gathers pace.

Implementation under the GENIUS Act

The NCUA's proposal isn't just a whim; it is a statutory requirement. Signed into law in July 2025, the GENIUS Act created the first federal framework for dollar-backed digital tokens. With a deadline to finalise regulations by July 2026, the NCUA has opened a 60-day public comment period to address critical sticking points regarding fee recovery and the technical evidence required for licensure.

The rewards dispute

The NCUA’s progress stands in stark contrast to the deadlock on Capitol Hill. The primary obstacle remains a perceived loophole in the GENIUS Act: while issuers are banned from paying direct interest on coins, the statute is silent on third-party platforms offering rewards.

Banks view this as an existential threat, fearing stablecoins will act as deposit substitutes. The crypto industry, led by Coinbase, argues that over-regulating these rewards will stifle the very innovation the act was meant to protect. Coinbase withdrew its support for the broader market structure bill in January, preferring a legislative void to what it calls long-term structural problems.

White House pushes for a spring resolution

Treasury Secretary Scott Bessent is losing patience. In a recent interview, Bessent described the opposition as coming from a few recalcitrant actors and urged lawmakers to push the measure across the line this spring.

The White House has tried to break the impasse, holding closed-door meetings between banking groups and crypto industry representatives to work through the main sticking points in the stalled market structure bill.

To move discussions forward, crypto firms have suggested keeping part of stablecoin reserves at community banks, an attempt to address concerns that stablecoins could pull deposits away from smaller lenders and tilt the competitive balance. So far, the talks have not produced a deal.