Hauptman Lays Out Stablecoin Stakes with Vegas Analogy

By John San Filippo

At the Underground Collision event, the NCUA Chairman discussed the “Genius Act,” succession planning, and the one job a stablecoin must do.

LAS VEGAS—On the eve of Money20/20, which takes place in Las Vegas, NCUA Chairman Kyle Hauptman outlined the high-stakes regulatory framework for stablecoins using a powerful analogy fitting for the setting: a casino chip.

Hauptman and Stankovic

Hauptman, speaking with host Brandi Stankovic at the Underground Collision event on Saturday, Oct. 25, confirmed he is deeply focused on implementing the new “Genius Act” and its fast-approaching rulemaking deadline.

“I have 266 days to complete the Genius Act rulemaking,” Hauptman said. “It’s July 18th of next year.”

The Act, which he noted includes provisions for credit unions to issue stablecoins via CUSOs, hinges on one non-negotiable factor. “The most important thing for stablecoin is to remain stable,” he stated flatly.

To illustrate the point, Hauptmnn compared a stablecoin to a casino chip.

“It’s Vegas. Here’s a casino chip. This is a $100 chip, and this is a $100 bill,” he explained, holding up both. “The room we’re in, all of this, this $4 billion hotel, all of it rests on one thing, that this is interchangeable for this without hesitation at any time.”

A stablecoin, he argued, must function with the same immediate, unwavering trust. Any rumor that an issuer can’t pay out would be catastrophic.

“What would happen down on the casino floor if a rumor got around, hey, they don’t have enough to pay us out,” he asked. “Everybody would get up and run to the cashier because who wants to be the one right after they run out of money, right?”

The Liquidity Challenge

The chairman detailed the primary risk to that stability: liquidity. He described a scenario where a stablecoin is properly backed by assets like U.S. Treasuries, but a redemption request comes in after the Treasury market has closed.

“It’s Friday night, 10 p.m.,” he posited. “All right, I got $30 cash, there you go. But the other $70 is in Treasurys. Treasury market doesn’t open till Monday.”

That delay, Hauptman warned, is unacceptable and could break the fundamental trust so essential to the success of stablecoins.

“I think in the short run, the answer is some kind of liquidity facility, right?” he proposed, suggesting a credit line from a bank. “In the long run, this won’t be an issue because tokenization will solve this. You’ll be able to sell your Treasurys Friday night at 10 p.m. and this won’t be a problem.”

Reluctant Support for Succession Planning

Hauptman also addressed the NCUA’s recent succession planning rule, admitting he was a skeptical supporter. “I didn’t love that rule,” he said, though he quickly added, “I thought that succession planning is important.”

His core doubt was whether the rule would achieve its stated goal of slowing credit union mergers. “It’s unclear to me whether or not the succession planning requirement will necessarily have that effect, right?”

He pointed to the banking industry as a counter-argument. “The bank’s merger rate, the number of mergers goes down exactly the same as credit unions, right? Bank consolidation is exactly the same as credit unions.”

Ultimately, Hauptman traded his vote for a review clause. “It was a 3-0 vote at the time because I sort of traded my vote for an agreement that within three years, if it is not actually doing what it’s supposed to do... the rule should be sunsetted, meaning the board at that time should have to affirmatively vote to approve it.”

On Fintech and the Future

On the broader topic of technology and fintech collaboration, Hauptman was clear that credit unions must evolve, with or without the regulator’s prompting.

“It’s important for them to do what they need to do to change, the way credit unions always have. Believe it or not, credit unions have changed without NCUA,” he stated. “Before 1970, credit unions actually innovated and did things without government oversight.”

While he believes the government is looking more favorably on technologies like artificial intelligence because agencies now use it themselves, he stressed that his role is not to pick winners. “It’s not that I wanted to collaborate with fintech per se. It’s not my business to promote any fintech or any technology.”

Instead, he argued, the market itself demands change. “It’s that credit unions don’t need me to tell them that life changes,” he noted. “And 30 years from now will not only be as different as 30 years ago, it’ll probably be even more different because technology accelerates.”

During a Q&A session, a fintech founder working with Stanford Federal Credit Union asked for advice on building trust. Hauptman reiterated his stability points but offered a final, practical tip for working within the industry.

“One thing about selling the credit unions, credit unions buy from other credit unions. Different than most industries,” he shared. “You get one credit union CEO that thinks you helped them and made their life better. You’re in good shape.”