Paradigm Files Comment Letter on the NCUA’s GENIUS Act Stablecoin Rulemaking

Today, Paradigm filed a comment letter with the National Credit Union Administration in response to the agency’s proposed rule implementing the GENIUS Act for stablecoin issuers. We support much of the proposed framework, but our letter also flags several areas where the proposal, as drafted, would impose unnecessary burdens on early-stage issuers, introduce legal uncertainty at odds with the Act’s text, and leave credit unions’ unique share-account structure without adequate protection.

Several of our concerns track what we’ve already raised with the OCC and the FDIC. We urge NCUA to decline to extend the GENIUS Act’s yield prohibition to related third parties or indirect arrangements, to preserve issuers’ ability to operate more than one stablecoin brand, and to adopt a monthly cadence tethered to defined reporting categories.

We also support the NCUA’s proposal to read the exclusion of deposits from the definition of payment stablecoin to reach tokenized shares, so that a credit union’s tokenized share account isn’t swept into the payment-stablecoin regime merely because it lives on a ledger. We think that’s the right reading based on the pure text of the Act, and we urge NCUA to remove any doubt by codifying that equivalence directly in the final rule. Clarity is not just a word for market structure; it must also be a guiding star in how the government structures all regulations.

That same technology-neutral principle should carry over to how NCUA treats reserves. We were glad to see NCUA propose that share insurance remain technology-neutral, and the same concept should apply to reserves. A reserve asset’s risk depends on the asset itself, not the ledger it happens to sit on. We therefore asked NCUA to extend that recognition to every eligible reserve category and to avoid imposing a quantitative cap on tokenized reserves, which would restrict issuers’ choices for reasons unrelated to actual risk. 

You can read Paradigm’s full comment letter here.