Overview
- The American Bankers Association’s Community Bankers Council sent senators a letter this week urging an amendment to extend the GENIUS Act’s interest ban to issuers’ affiliates and partners as part of broader market-structure legislation.
- Bankers say exchanges such as Coinbase and Kraken offer rewards on certain stablecoins that replicate interest through third parties despite the law’s bar on issuer-paid interest.
- Industry groups including the Banking Policy Institute have warned that yield-style stablecoins could prompt large deposit outflows—estimated as high as $6.6 trillion—constraining credit for small businesses, farmers, students, and homebuyers.
- Crypto advocacy groups counter that payment stablecoins do not fund loans and argue that restricting intermediated rewards would stifle innovation and limit consumer choice.
- Regulators have been cautious about the immediacy of the risk, with OCC chief Jonathan Gould saying any material deposit flight would be gradual and observable rather than sudden.