125 Crypto Groups Tell Congress Stablecoin Yield Ban Favors Big Banks
A coalition of 125 crypto and fintech organizations delivered a forceful rejection of banking business efforts to increase the GENIUS Act’s prohibition on stablecoin yields, warning that broader restrictions would remove client selection whereas defending conventional banks from competitors.
The Blockchain Association led the coalition in a letter to Senate Banking Committee Chairman Tim Scott and Ranking Member Elizabeth Warren on Wednesday, arguing that makes an attempt to reinterpret the regulation’s yield ban signify protectionism quite than client safety.
“The push to limit stablecoin rewards past that agreed to in GENIUS isn’t a technical refinement or a client safety repair,” the letter acknowledged.
“It would prohibit the identical kinds of incentive packages for stablecoin funds that banks have lengthy supplied on bank cards and different kinds of fee companies.“
1/ Today, we led a broad coalition of greater than 125 business leaders in a letter to Congress urging lawmakers to protect the rights enumerated within the GENIUS Act that make sure the United States stays probably the most aggressive and revolutionary capital market on this planet.
— Blockchain Association (@BlockchainAssn) December 18, 2025
Banks Push Asymmetric Restrictions on Digital Payments
The dispute facilities on whether or not platforms like Coinbase and PayPal can offer rewards to stablecoin users by loyalty packages and third-party incentives.
While the GENIUS Act explicitly prohibits stablecoin issuers from paying curiosity on to holders, the coalition maintains that Congress intentionally preserved intermediaries’ capacity to supply lawful rewards on the software layer.
Banking teams led by the American Bankers Association have urged Treasury to interpret “curiosity or yield” broadly sufficient to seize any financial profit, together with service provider reductions and platform rewards.
The coalition known as this enlargement “overtly protectionist,” noting that banks face no comparable restrictions on bank card rewards regardless of participating in riskier balance-sheet actions than GENIUS-regulated stablecoin issuers.
“With the federal funds charge at roughly 3.50–3.75%, common checking account yields stay close to 0.07% and financial savings accounts round 0.40%,” the letter famous.
“Stablecoin rewards packages allow platforms to share worth straight with customers, serving to households profit from higher-rate environments quite than absorbing losses to inflation.“
Coalition Disputes Bank Deposit Flight Claims
Banking associations have warned that stablecoin yields could trigger deposit outflows resembling the 1980s cash market fund disaster, when withdrawals drained $32 billion from banks between 1981 and 1982.
Treasury estimates recommended yield-bearing stablecoins may lead to as much as $6.6 trillion in deposit flight.
The coalition firmly rejected these projections, citing Charles River Associates’ evaluation, which discovered no proof of disproportionate deposit outflows from neighborhood banks between 2019 and 2025.
The letter questioned how banks can declare deposit constraints whereas holding roughly $2.9 trillion in reserve balances, incomes curiosity on the Federal Reserve quite than deploying them into loans.
“Opposition to stablecoin rewards displays safety of incumbent income fashions, not safety-and-soundness considerations,” the coalition wrote, arguing that limiting third-party incentives would stop stablecoins from competing on a degree enjoying discipline with legacy fee methods.
Citi government warns stablecoin curiosity funds may drain financial institution deposits just like the Eighties disaster amid GENIUS Act loophole considerations.#Stablecoin #Bankshttps://t.co/aaHxz9bXHM
— Cryptonews.com (@cryptonews) August 25, 2025
Regulatory Certainty and Market Competition at Stake
Beyond client selection, the coalition warned that reopening the yield subject earlier than GENIUS implementation begins would undermine the regulatory certainty that defines Congressional frameworks.
“It would sign that even lately enacted compromises stay topic to virtually fast renegotiation, undermining the predictability that markets, customers, and innovators depend on,” the letter acknowledged.
The teams emphasised that rewards and incentives are customary aggressive instruments in markets with high community results and switching prices, together with the present funds market.
Stablecoins supply sooner settlement, decrease transaction prices, and higher transparency in comparison with conventional rails, however adoption requires incentives to beat entrenched person habits.
The signatories embody business leaders corresponding to Coinbase, PayPal, Stripe, Ripple, and Kraken, in addition to Stand With Crypto chapters throughout 20 states and funding corporations corresponding to Andreessen Horowitz and Paradigm.
“Preserving the stability Congress struck is crucial to defending customers, fostering competitors, and guaranteeing that market construction laws can advance on a bipartisan and sturdy foundation,” the coalition concluded, urging lawmakers to reject any effort to increase the yield prohibition past issuer funds.
The dispute comes as stablecoin adoption accelerates, with a circulation of $310 billion.
The market may triple to $1 trillion by 2026 as establishments combine blockchain funds into monetary infrastructure.
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