Don’t let crypto rewards undermine Delaware’s community banks

When Delawareans think of innovation, we think of history and progress in equal measure.

From being the first state to ratify the U.S. Constitution to becoming home to thousands of businesses that power American commerce, our state has long led the nation in balancing enterprise with accountability. That is why I’m deeply concerned about a loophole in the GENIUS Act that threatens the financial stability of our communities and puts small businesses here in Delaware at real risk.

The GENIUS Act was crafted to bring clarity and regulation to digital assets. We all want responsible innovation. But buried in the legislation is a loophole that allows crypto companies to pay rewards directly to holders of stablecoins without the same rules, safeguards, or obligations that community banks must follow. On the surface, this may sound like a technical detail. In practice, it could drain deposits from local banks and weaken the very institutions that small businesses depend on to survive and grow.

Community banks do not exist to chase speculative returns. They take deposits from local families and businesses, and reinvest that money right back into the community through loans.

Those deposits are the primary funding source for small business lending. When people move their money out of community banks, those banks have less capital to lend. Fewer deposits mean fewer loans, tighter credit, and higher costs for small businesses.

Allowing crypto firms to offer attractive rewards to stablecoin holders creates a powerful incentive for people to move their money, sometimes their life savings, out of safe, FDIC-insured local banks and into unregulated digital tokens. A higher rewards rate may look appealing in the short term, but the long-term impact is clear: less money in community banks and less money available for small business loans.

In Delaware alone, this loophole could push nearly $1 billion in deposits out of our banking system. That is $1 billion no longer available to support small business expansion, payroll, equipment purchases, or storefront renovations. It is $1 billion pulled out of a system that won’t help a contractor secure a line of credit, a café hire another employee, or a family-owned business open a second location.

Delaware’s small business owners are already facing rising costs and lingering supply chain challenges. They rely on community banks that know their customers, understand local markets, and make lending decisions based on relationships, not algorithms. When deposits flow out of those banks into speculative financial products, the impact lands squarely on Main Street.

This issue is not about stifling innovation; it’s about ensuring that financial modernization does not undermine the real economy. Delaware has always proven that commerce and conscience can go hand in hand. We must urge Sen. Lisa Blunt Rochester to use her voice on the Senate Banking Committee to close this loophole in the GENIUS Act so digital asset policy does not come at the expense of community banking.

Our constituents deserve a financial system that protects their savings, keeps capital working locally, and supports the small businesses that power Delaware’s economy. By closing this loophole, we can uphold our state’s tradition of leadership – protecting both innovation and the communities that depend on it.