At the Highland County Economic Development Authority, the mission has always been clear: promote sustainable economic development while preserving the rural values and the natural beauty that define us. A key pillar of that mission is supporting our local businesses and by extension, our community banks, which serve as the financial backbone of our region.
As a former EDA member and a former CEO of a community bank and small businessman, I feel compelled to speak out about a growing threat to that foundation: a loophole created by the recently passed GENIUS Act.
On the surface, the GENIUS Act, which is short for Guiding and Establishing National Innovation for U.S. Stablecoins, was designed to foster financial innovation, particularly in the digital asset space. But in practice, it has opened the door for large banks and cryptocurrency platforms to offer outsized rewards and returns in exchange for deposits, which consumers would withdraw from their bank accounts and use for investments in crypto.
Let’s be clear: these crypto platforms are not banks. They are not subject to the same rules that govern FDIC-insured institutions so if they fail, any investments are not protected, and they do not reinvest in our communities. This is stated clearly in an article recently published by the Brookings Institute, which highlights how banks are allowed to provide consumers with rewards under “tight limitations, constant oversight and federal deposit insurance,” that crypto platforms do not follow. Yet the GENIUS Act loophole allows them to operate in a regulatory gray area, marketing high-yield “reward” programs that are, to the average depositor, indistinguishable from traditional interest-bearing accounts.
The result? A slow siphoning of deposits out of community banks and into opaque, volatile platforms, which large banks and fintech companies are positioned to dominate. Community Banks typically have about 75-85 percent loan to deposit ratio which means for every dollar of deposits, 75-85 cents are loaned out in the community. So, when deposits are lured out of community banks to the mega bank Stablecoins or other crypto currencies, that is less money to lend locally for small businesses trying to start or expand, to farmers to upgrade equipment or expand their herd, less money for families trying to buy their first home, replace a car, etc. Community banks, already facing headwinds from consolidation and digital disruption, rely on local deposits to reinvest in their communities.
When deposits dry up, lending slows. When lending slows, growth stalls. And when growth stalls in a rural economy like ours, the effects are deeply felt — in empty storefronts, fewer jobs, and dwindling opportunities for the next generation.
We are not anti-innovation. In fact, we welcome it when it’s done responsibly and with a level playing field, but this loophole tilts the scales dangerously against the very institutions that have helped keep rural America afloat for generations.
Congress must take a hard look at the unintended consequences of this legislation. I hope that Senator Warner leads by example and recognizes the negative impact of this loophole. If we are serious about strengthening our rural communities, not just in Highland County, but across the country, we must ensure that innovation supports, rather than undermines, their long-term stability and strength.
Financial innovation should empower communities, not hollow them out.
Kirk Billingsley is a native of Highland County, a former member of Highland County Economic Development Authority, a former CFO of a community bank and a small businessman (former owner of Big Fish Cidery in Monterey).