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2w ago

Banking Groups Press Congress to Close Stablecoin Yield Loophole as Exchanges Offer Rewards

Regulators have not finalized implementing rules for the GENIUS Act leading banks to warn that a wording gap lets exchanges offer yield-like rewards

U.S. President Donald Trump holds the signed "Genius Act", which will develop regulatory framework for stablecoin cryptocurrencies and expand oversight of the industry, at the White House in Washington, D.C., U.S., July 18, 2025. REUTERS/Annabelle Gordon/File Photo
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A sign at the intersection of Broad Street and Wall Street is shown on Tuesday, July 16, 2024, in New York.
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Overview

  • The American Bankers Association, Bank Policy Institute and over 50 state banking groups petitioned Congress to extend the Act’s yield prohibition to exchanges and affiliates, warning of up to $6.6 trillion in potential deposit outflows
  • Coinbase and PayPal continue to offer rewards of up to 4.1% on USDC and 3.7% on PYUSD by structuring them as non-issuer payouts to holders
  • Regulators have not finalized detailed rules on reserve backing, capital requirements and AML/KYC compliance for stablecoin issuers under the GENIUS Act
  • The Act bars rejection of applications for using permissionless blockchains even though the Federal Reserve’s Policy Statement 9(13) still advises against open networks for bank-issued tokens
  • Circle and Stripe are building compliance-focused blockchains—Arc and Tempo—and filing for OCC charters in anticipation of stablecoin issuance