Overview

• Exchanges such as Coinbase and PayPal are offering interest-like rewards on stablecoin holdings through third-party platforms, which banks say exploits a gap in the law.
• A coalition of banking trade groups led by the Bank Policy Institute and American Bankers Association petitioned Congress on August 12 to extend the GENIUS Act’s yield ban to exchanges and affiliated entities.
• Federal regulators, including the OCC and Treasury Department, are drafting detailed rules for reserve requirements, disclosures and AML compliance under the law with phased implementation timelines.
• Major firms from Bank of America and Citigroup to fintechs Circle and Paxos have filed charter applications and are preparing to issue compliant payment stablecoins.
• Analysts warn that concentrating large reserves in short-term Treasuries could strain government debt markets and that mandatory transaction-blocking rules under the Bank Secrecy Act may heighten financial surveillance concerns.