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Dear Editor,
South Carolina has long benefited from Senator Tim Scott‘s leadership. As Chairman of the Senate Banking Committee, Scott has championed both financial innovation and the community banks that drive small business growth. His steady voice has been essential as congress works to bring order and accountability to the rapidly evolving world of digital assets.
Despite congress’s progress, a dangerous loophole in stablecoin regulation now threatens South Carolina’s economy. The GENIUS Act aimed to establish rules for stablecoins, including prohibiting issuers from paying interest directly to holders. Lawmakers made this choice for a simple reason: interest-bearing stablecoins could divert deposits from community banks.
Unfortunately, the current law has a loophole. Affiliated companies and crypto exchanges can still offer “rewards” that act exactly like interest. The Treasury Department warns that up to $6.6 trillion in bank deposits could move into stablecoins if this loophole remains. Such outflow would affect South Carolina’s small businesses long before it shows up in national economic data.
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From 2010 to 2025, community banks provided 4,350 SBA loans to South Carolina entrepreneurs, totaling $3.8 billion in direct investment across all 46 counties. These loans helped family farms grow and created jobs in communities that are often overlooked.
If deposits convert into interest-like stablecoin products, the effects will be immediate: fewer loans, tighter credit, and higher borrowing costs. Rural communities would experience the shock first.
That is why this loophole must be closed through congressional action. Senator Scott has been a national leader on this issue, championing innovation while protecting consumers and strengthening national security. Now, Congress must finish the job and ensure that stablecoins cannot mimic interest payments through backdoor incentives.
This isn’t a partisan issue; it’s an economic one. South Carolina’s community banks have demonstrated their worth. Protecting this system should be a top priority for every lawmaker.
Linda Kelly
Varnville, S.C.
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FROM THE EDITOR…
Thanks for submitting this piece, Linda! Always enjoy spending time in Varnville.
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