What’s Going On?
Crypto advocacy groups, Crypto Council for Innovation (CCI) and the Blockchain Association, have urged U.S. lawmakers to reject an attempt by major banking groups to amend the newly passed GENIUS Act, which regulates stablecoins.
What’s the GENIUS Act?
The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) is a new federal law that creates a regulated framework for stablecoins, including requirements like full reserve backing and transparency, while preventing stablecoins from being treated like bank deposits.
What Are Banks Proposing?
Lobbyists from groups like the American Bankers Association (ABA) and Bank Policy Institute (BPI) argue that the law doesn’t explicitly ban yield (interest) programs run by third parties, such as exchanges or affiliates of stablecoin issuers. They warn this loophole could siphon as much as $6.6 trillion from traditional bank deposits, undermining the banking system’s ability to fund loans.
They’re also calling for the repeal of Section 16(d), which allows certain state-chartered entities to operate stablecoin businesses across state lines without needing additional licenses.
How Crypto Groups Respond
CCI and the Blockchain Association strongly oppose these changes, stating they would tilt the regulatory field toward traditional banks and hurt innovation and consumer choice. They argue that:
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Payment stablecoins are not the same as bank deposits and should not be regulated as such.
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Removing Section 16(d) would fragment regulations and hinder interstate commerce.
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A study by Charles River Associates found no evidence stablecoin growth is harming bank deposits.
What This Means for You
Stablecoin yield rules – Regulators are defining how stablecoins can earn interest, without being classified as bank products.
Fair competition – Crypto advocates want stablecoins to remain accessible and not dominated by legacy financial institutions.
Legal clarity – Fighting changes helps maintain a consistent, innovative crypto landscape.
Consumer choice – Users could lose options if stablecoin yield features are too restricted.
