You may not have thought much about the new federal GENIUS Act and what it might mean for the future of consumer banking, but many Northern Colorado bankers have been worrying about it quite a bit.
Congress passed the new stablecoin legislation in July, and it has big implications for local economies, several Northern Colorado bankers said at the BizWest Banking CEO Roundtable Tuesday. BizWest holds regular industry roundtable events to get input from area business leaders.
The GENIUS — or Guiding and Establishing National Innovation and U.S. Stablecoins — Act generally creates new federal regulations for stablecoins, a cryptocurrency tethered to the value of the U.S. dollar or other asset. The federal legislation also established stablecoin guidelines for banks and other agencies.
Stablecoins could be “very disrupting” to commercial banking because banking relies on deposits, and consumers in the future could put money into stablecoin rather than deposit it in banks, said Tom Chesney, president of the commercial bank division at AMG National Trust Bank.
“We rely on deposits, and stablecoins have the potential to capture the deposits,” Chesney said.
In a related vein, if a corporation such as Amazon or Walmart were to create a stablecoin, “that could take a whole lot of liquidity out of the banking industry,” said Andy Montgomery, CEO of FMS Bank, which has offices in Greeley and Fort Morgan.
“I don’t think it has been thought through,” Montgomery said of the new federal legislation.
Fraud protection related to customer security and privacy are just as important to discuss when thinking about such cryptocurrency transactions, said Ryan Cassidy, market president of Northern Colorado for First Western Trust Bank. Bankers and consumers don’t fully know or understand all of the security risks involved, yet, he said.
“What does (the new federal legislation) look like for privacy? What does it look like for fraud protection?” Cassidy asked rhetorically.
Fraudsters are going after consumers, already, and banks work hard to hold the scams at bay, said Kaycee Lytle, Bank of Colorado’s Greeley market president.
“It’s largely consumer-driven, and fraudsters have new opportunities to commit fraud … it seems like we’re two steps too late. We’ll figure it out, and they’ll find a way to move on and create another opportunity for fraud,” Lytle said.
At the same time, because cryptocurrency advocates say that blockchain transactions are transparent to the outside world, could that help bankers in some way, asked Tanan Miles, chief retail officer at Ent Credit Union. People created the blockchain concept in 2008 for cryptocurrency transactions, according to public reporting.
“Wouldn’t proponents of blockchain … say the transparency is there?” Miles asked rhetorically. “If you all were sharing inside the same fortress … you can validate a shared ledger.”
While that specific question went unanswered by others in the room, bankers also discussed how the state of Wyoming recently approved the Frontier Stable Token, the first stablecoin available from a public entity, according to a press release from the office of Wyoming Gov. Mark Gordon.
“Wyoming … kicked off the initiative in August,” said Matthew Pope, who joined the conversation by video chat from his Cheyenne office of First Interstate Bank. Pope is the Northern Colorado market president of the bank as well.
Consumers and the general public don’t seem to know much about how cryptocurrency might affect them, but bankers have been lobbying for higher FDIC rates for a while, without success, said Mark Brase, president and CEO of Points West Community Bank. The FDIC is an independent agency created by Congress to insure bank deposits.
“The overall effects on the economy are a big unknown,” Brase said of the new federal legislation.
On the more-traditional financial side, the bankers also discussed the Northern Colorado housing market and where it’s heading, as well as the regional economy.
Builders are busy in Northern Colorado, but there appear to be many factors at play in the housing market, several bankers said. Higher interest rates seem to be keeping many people in their current homes, while others seem to be investing.
“We’re cautiously optimistic,” said Jason Jones, executive vice president of commercial banking at Adams Bank & Trust. “There’s a lot of building going on in Northern Colorado.”
Building costs seem to be going up, said Greg Harrell, senior director of community banking at FNBO. It’s expensive to live here, and homeowner’s insurance and taxes going up keep bankers busy with trying to make mortgages work for consumers, he said.
“It’s a mixed bag right now … we’re seeing our construction and builders on the residential side slowing down,” Harrell said.
Consumers seem to be hunkering down on the retail side, too, said Gerry Agnes, CEO at Elevations Credit Union, who attributed the shift to how people shopped during and after the COVID pandemic.
“Walmarts and Costcos are up, and higher-end retailers are down,” Agnes said.
One constant seems to be how much consumers like to tour new homes, Brase said, based on the Parade of Homes event he attended over the weekend.
“I went out of curiosity, and from a real estate broker perspective, they were encouraged with the traffic. There already had been 800 people through that home that day,” Brase said.
The CEO Roundtable was attended by Sean Nohavec and Ryan Abdoo of sponsor Plante Moran; Ashley Legan and Donna Lance of sponsor Berg Hill Greenleaf Ruscitti LLP; and Agnes of sponsor Elevations Credit Union.
