The GENIUS Act has moved our nation forward in the rapidly evolving world of digital currencies and crypto investments. This legislation has played a vital role in keeping America at the forefront of financial innovation. However, a serious loophole in the law has been found — one that threatens our community banking system and the small businesses and people who rely on it.

The GENIUS act barred cryptocurrency from paying interest to people who hold it. However, due to this Stablecoin Interest Loophole, third party companies are offering interest on cryptocurrency investments, avoiding the prohibition on these currencies paying interest themselves. As a result, it’s estimated that trillions of dollars could exit the traditional banking system and flow to cryptocurrency holdings.

With fewer deposits on hand, many banks may be forced to limit their lending. Community banks around Pennsylvania are relied on for mortgages, car loans and small business financing.

I’m confident that in the long term, traditional banks and cryptocurrency can coexist productively. However, if this loophole continues to be abused, some banks could lose the ability to provide these essential lending services.

It’s crucial that our federal policymakers recognize this potential problem and take swift action to protect the future of community banking and the financial well-being of the people they serve.

Clem Rosenberger, NexTier Bank president and CEO, Butler