U.S. banking associations are intensifying pressure on lawmakers to close a regulatory loophole that allows crypto platforms to offer yields on stablecoins.
Bank Pressure
Bank associations, such as the American Bankers Association and the Bank Policy Institute, warn of potential deposit flight amounting to $6.6 trillion. This could create an uneven playing field for traditional banks.
Controlling Stablecoins: The GENIUS Act
The recently proposed GENIUS Act aims to regulate the stablecoin market by banning issuers such as Circle and Tether from directly offering interest payments but does not prohibit exchanges from distributing revenues to customers.
Cryptocurrency Industry Response
Crypto organizations like the Crypto Council for Innovation argue that banks are trying to stifle competition. Coinbase's Chief Legal Officer Paul Grewal dismissed the banks' claims, stating it is 'no loophole at all'.
The confrontation between Wall Street and the cryptocurrency sector highlights rising tensions as stablecoins gain prominence as financial tools. The outcome will likely influence the trajectory of digital finance in the U.S.
