GENIUS Act Sparks Fears Over Alabama's Small Bank Survival

GENIUS Act Sparks Fears Over Small Bank Survival in Alabama

Written by Aaron S.,

Editor-In-Chief

Last Updated: September 11, 2025

Key Takeaways

Senator Keith Kelley warns that the GENIUS Act could weaken small banks by letting crypto platforms indirectly offer financial perks;
The law blocks stablecoin issuers from paying interest but does not clearly stop partner firms from offering similar rewards;
Kelley stated that rural banks rely on local deposits to fund loans, and losing those deposits could hurt communities.

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Alabama State Senator Keith Kelley has expressed concerns over how the recently enacted GENIUS Act could negatively affect smaller banks across rural areas of the country.

According to a September 10 report by 1819 News, Kelley pointed to a gap in the wording of the law that could allow crypto firms to offer financial perks through indirect channels.

The GENIUS Act explicitly prevents stablecoin issuers from paying interest or similar benefits to those who hold these digital assets. However, the law does not clearly block related businesses, like crypto exchanges or affiliates, from offering such incentives on the issuer’s behalf.

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According to Kelley, this opens the door to crypto platforms using partner services to deliver rewards to users. Customers may be tempted to move their money from local banks to these crypto platforms in search of returns.

He explained that while larger financial institutions may have diverse sources of funding, smaller banks often depend directly on savings from residents.

When those deposits shrink, it becomes harder for them to continue lending for home purchases, vehicle financing, or operating capital for small businesses.

Kelley placed focus on agricultural areas, where income tends to vary by season and borrowing is often used to manage operations. He argued that these communities could be vulnerable if they lose access to familiar banking services that understand their specific needs.

On August 19, the Crypto Council for Innovation (CCI) and the Blockchain Association sent a letter to the Senate Banking Committee about the GENIUS Act. What did they say? Read the full story.