In Likely Final HFSC Appearance, Hauptman Makes Case For Stablecoins, Smaller Credit Unions
By CU Today Staff —
WASHINGTON—Outgoing NCUA Chairman Kyle Hauptman used what is likely to be his final appearance before the House Financial Services Committee to champion stablecoins, defend the role of smaller financial institutions and argue that regulation often falls hardest on community based credit unions.
Hauptman highlighted the agency’s recent proposed rule implementing the stablecoin provisions of the GENIUS Act, saying it would place credit unions on equal footing with banks as permitted payment stablecoin issuers. He argued stablecoins could make payments faster, cheaper and available around the clock, while creating new opportunities for credit unions to participate in a modernized payments system.
Hauptman testified before the HFSC during its annual hearing on the state of the nation's prudential regulators, appearing alongside Federal Reserve Vice Chair for Supervision Michelle Bowman, FDIC Chairman Travis Hill and Acting Comptroller of the Currency Jonathan Gould.
“Every day is a business day with stablecoins,” Hauptman said, suggesting the technology could eventually allow tax refunds, government payments and other transfers to be delivered instantly regardless of weekends or holidays. He added that stablecoins could prove especially valuable during future emergencies by allowing relief payments to reach consumers more quickly and securely.
For credit unions, Hauptman shaped the issue as both a competitive and strategic opportunity. He said the NCUA’s recently proposed rulemaking on permitted payment stablecoin issuer standards is designed to ensure federally insured credit unions can participate in the emerging ecosystem under a regulatory framework comparable to that available to banks.
Hauptman also pushed back against concerns that stablecoins could significantly drain deposits from credit unions, noting that more than 80% of existing dollar-denominated stablecoin activity occurs outside the United States. He contended that broader adoption of dollar-backed stablecoins could strengthen global demand for U.S. dollars and Treasury securities, potentially lowering government borrowing costs while reinforcing the dollar’s status as the world’s reserve currency.
Beyond stablecoins, Hauptman emphasized the overall health of the credit union system. He noted that approximately 4,300 credit unions now serve more than 145 million members and manage more than $2 trillion in assets. As of Dec. 31, 2025, the industry's aggregate net worth ratio stood at 11.3%, while asset growth increased to 5.4% from 2.3% a year earlier, evidence that the system remains resilient despite economic uncertainty.
In closing, Hauptman delivered a broader warning about the cumulative burden of regulation on smaller institutions. He argued that many rules are written as if every institution can afford large compliance staffs, even though smaller credit unions and community banks often serve specialized communities and industries that larger institutions overlook.
“We're a better, more prosperous country because of the unique American financial system that still contains over 8,000 banks and credit unions,” Hauptman said.
He urged policymakers to preserve that diversity, arguing that credit unions and community banks play a critical role in serving niche markets, expanding consumer choice and ensuring the financial system does not become dominated by a handful of large institutions.
Hauptman Responds To Committee Questions
During the Q&A portion of the hearing, Hauptman defended the role of credit unions in serving specialized communities, criticized the practice of “regulation by enforcement,” and highlighted the agency’s efforts to tailor oversight for a diverse credit union system.
Responding to Rep. Vicente Gonzalez (D-TX), who asked about lending flexibility for veterans, first-time homebuyers and small businesses, Hauptman said community-focused lending can be consistent with safety and soundness. He argued that the U.S. financial system benefits from having many specialized financial institutions serving distinct markets and communities, rather than a concentrated banking sector dominated by a handful of large institutions.
When questioned by Rep. Lisa McClain (R-MI) about regulation by enforcement, Hauptman called the practice “unethical” and said enforcement actions should never be used to establish policy. He pointed to steps NCUA has taken to formally reject the approach, saying the agency has made clear that supervisory expectations should be set through transparent policy and rulemaking processes rather than settlements or enforcement actions.
In an exchange with Rep. Tim Moore (R-NC) on regulatory tailoring, Hauptman said NCUA has conducted a top-to-bottom review of its regulations over the past year and a half to eliminate outdated, redundant and conflicting requirements. He added that the agency wants credit unions to pursue different business models and serve different markets, noting that a diverse credit union system is beneficial from both a competitive and insurance-risk perspective.
America's Credit Unions thanked Hauptman for his work to right-size regulations and ensure a unique and diversified credit union industry, where all sizes and types can thrive.
"We agree with the chairman that credit unions are best equipped to serve their local communities in ways that no other financial institution can, because they are truly engrained in those communities. We look forward to continuing to work with the Chairman and NCUA on efforts to tailor and modernize regulations to support this diversification,” said America’s Credit Unions Chief Advocacy Officer Kathleen Coulombe.
DCUC Chief Advocacy Officer Jason Stverak said Congress's oversight comes at a pivotal time for the credit union industry.
"Recent public materials from the NCUA show that the agency is focused on risk-based supervision, Share Insurance Fund stability, responsible innovation, and a deregulatory review of outdated or unnecessarily burdensome rules. Those are consequential priorities for the institutions our members operate and for the servicemembers, veterans, and military families they serve," Stverak stated.
Originally reported by CU Today.