Opinion: Close the GENIUS Act loophole, protect our community banks and our small businesses

I have spent years walking the length of Tweedy Mile in South Gate, talking with shop owners as they sweep their storefronts at sunrise or lock up late at night after a long day of serving their neighbors. Tweedy Mile is more than just a stretch of shops. It is the economic and cultural heartbeat of our community, home to hundreds of predominantly family-owned businesses that create jobs, support families and bring life to our city. Our association works every day to revitalize this corridor through events, beautification projects and business support initiatives that make South Gate a place where entrepreneurs can succeed.

But revitalization doesn’t happen on vision alone. It requires access to capital. And that is where community banks play an indispensable role.

Community banks know our neighborhoods. They understand the rhythms of our businesses, the challenges of seasonal cash flow, and the importance of relationships built over time. When a business owner on Tweedy needs a loan to expand, hire or simply stay afloat during a tough stretch, it is often a community bank that says “yes” when others won’t.

That is why any policy that threatens the stability of community banks must be taken seriously and addressed head on. At a time when small businesses are still navigating inflation, rising costs and shifting consumer habits, the last thing we need is our community banks to disappear.

One issue that demands urgent attention is a loophole in the GENIUS Act that allows crypto trading platforms to circumvent the prohibition of permitted payment stablecoin issuers and foreign payment stablecoin issuers from paying interest or yield on their products. This loophole could trigger billions of dollars to flow out of community banks. Those outflows would directly reduce the ability of community banks to lend, tightening credit at the exact moment small businesses need it most. Considering that more than 50% of small business loans come from community banks, the impact of this deposit loss would be detrimental to entrepreneurship in California and across the county.

Fewer loans mean fewer storefront improvements, fewer expansions and fewer opportunities for entrepreneurs to take a chance on their dreams. It means families who rely on those businesses for jobs and income would feel the strain. It means communities like South Gate could see revitalization efforts slow or even stall.

It is critical that Senators Adam Schiff and Alex Padilla take action. I call on them to follow this issue closely and urge their colleagues on the Senate Banking Committee to close this loophole in the GENIUS Act before real harm is done.

If we are serious about revitalizing our downtowns, supporting small businesses and strengthening communities like Tweedy Mile, then we must protect the institutions that make that progress possible. That starts with closing harmful loopholes, strengthening oversight where needed and ensuring that community banks can continue to do what they do best: Invest in people, in neighborhoods and in the future we are building together.