Recent amendments to the GENIUS Act raise concerns among U.S. banking associations, claiming that the bill poses risks to the traditional financial system.
Threat to Traditional Banks
Major banking groups, including the American Bankers Association and the Bank Policy Institute, express concern that the GENIUS Act allows crypto platforms to indirectly offer rewards on stablecoin holdings, posing a threat to traditional banks.
$6.6 Trillion at Stake
Banking associations estimate that this loophole could lead to as much as $6.6 trillion in deposits exiting traditional banks. This scenario could trigger a mass outflow of funds from regulated institutions, impacting financial stability.
Balancing Innovation and Financial Stability
The debate surrounding the GENIUS Act highlights the contradiction between innovation in the crypto industry and the need for financial oversight. Lawmakers face the challenge of updating the Act to mitigate systemic risks while not stifling innovation.
Further regulation is essential to protect traditional banks and consumers, ensuring the safety of the financial system in the face of rapid cryptocurrency development.
