The conflict between crypto firms and traditional banks is intensifying, particularly around new regulatory initiatives affecting stablecoins. The escalation of the dispute has occurred due to new legislation that could significantly alter the landscape of financial services in the United States.
Who Is Against Whom: Banks and the Crypto Industry
Bitwise CIO Matt Hougan accused JPMorgan Chase of limiting interest on stablecoins, arguing that banks are trying to protect their profits by offering customers minimal interest rates ranging from 0% to 0.01%. Hougan also pointed out that some stablecoin platforms offer yields approaching 5% with low deposit requirements, leading to concerns about a mass exodus of deposits from traditional banks.
Analysis of the New GENIUS Act
The GENIUS Act, which was passed by Congress, established the first comprehensive federal framework for stablecoin regulation. However, it also imposed restrictions on interest payments for issuers like Circle and Tether. Financial organizations are lobbying for further tightening of conditions to prevent competitive advantages for cryptocurrency exchanges such as Coinbase and Binance.
The Future of Stablecoins and Economic Projections
Experts warn of a potential deposit migration of up to $6.6 trillion due to competitive yields on stablecoins. Meanwhile, cryptocurrency advocates dismiss such projections as manipulations aimed at protecting traditional financial institutions. There is potential for the stablecoin market to grow to $1.2 trillion by 2028, positioning them as significant players in the global economy.
The conflict between the crypto industry and traditional banks over stablecoins raises important questions about the future of the financial system and market competition. The success or failure in this battle could affect the availability of interest rates and financial opportunities for consumers in the future.
