Banks in the United States are lobbying to change new stablecoin regulations under the GENIUS Act, fearing massive deposit outflows as crypto exchanges gain a competitive advantage in offering yield to customers.<\/p>\n
The legislation<\/a>, which passed in July, prohibits stablecoin issuers, which could include banks<\/a>, from paying interest directly to customers. However, crypto exchanges that hold stablecoins, such as USDT and USDC, can offer yields and rewards on them.<\/p>\n Banking lobbies, such as the American Bankers Association, warned that this creates a \u201cloophole.\u201d At the same time, banks, which traditionally offer much lower interest rates, fear it creates an \u201cuneven playing field,\u201d according<\/a> to the Financial Times.<\/p>\n The banking industry representatives, citing an April Treasury report, claimed that stablecoins could drain $6.6 trillion in bank deposits.<\/p>\n They warned of \u201cgreater deposit flight risk, especially in times of stress, that will undermine credit creation throughout the economy,\u201d which could result in \u201chigher interest rates, fewer loans and increased costs for Main Street businesses and households.\u201d<\/p>\n Over the weekend, Politico reported<\/a> that the financial world is \u201cbarreling toward a lobbying civil war in Washington.\u201d<\/p>\n The bankers<\/a> and lobbyists, who generally see crypto as a threat to their businesses, want to block all crypto companies from paying yield to customers who hold stablecoins, it stated. They also want to repeal a section of the law that they say \u201callows state-chartered uninsured depository institutions to operate nationwide without proper supervision.\u201d<\/p>\n The banks \u201cwant to keep it for themselves,\u201d which is \u201cabsolutely outrageous rent-seeking,\u201d said crypto investor Ryan Sean Adams.<\/p>\n \u201cStablecoin yield belongs to the people, not the banks.\u201d<\/p>\n Meanwhile, Bitwise CIO Matt Hougan saw the funny side, observing the paltry interest rates that leading banks are offering.<\/p>\n I think JPMorgan Chase is confused. Can someone tell them that the 0% interest rule is only for stablecoins, not bank accounts? https:\/\/t.co\/cXIuWJJMeb<\/a> pic.twitter.com\/oj8b1zC3cC<\/a><\/p>\n \u2014 Matt Hougan (@Matt_Hougan) August 25, 2025<\/a><\/p>\n\n Former commissioner of the Commodity Futures Trading Commission and current Blockchain Association CEO, Summer Mersinger, pointed out<\/a> on Monday that the GENIUS Act is \u201csettled law.\u201d<\/p>\n \u201cThere was robust debate on the Hill, and the way this bill came out was a compromise from policymakers,\u201d<\/p>\n \u201cThis was no loophole and you know it,\u201d Coinbase chief legal officer Paul Grewal wrote on X in response to the bankers\u2019 statement.<\/p>\n Meanwhile, the Crypto Council for Innovation wrote that banks were seeking to create an \u201cuncompetitive payment stablecoin environment, protecting banks at the expense of broader industry growth, competition, and consumer choice.\u201d<\/p>\n Bowing to banks\u2019 demands would \u201ctilt the playing field in favour of legacy institutions, particularly larger banks, that routinely fail to deliver competitive returns and deprive consumers of meaningful choice,\u201d the associations added.<\/p>\n Former Paxos consultant Austin Campbell said banks were trying to \u201ccripple stablecoins\u201d so that they could continue to,<\/p>\n \u201cPay you 0% on deposits while making risky loans to commercial real estate billionaires, paying themselves huge bonuses if it works and sticking you with the losses if it doesn\u2019t.\u201d<\/p>\n A timely reminder of why this all is important as banks begin lobbying to cripple stablecoins so that they can continue to:<\/p>\n 1 \u2013 Pay you 0% on deposits while making risky loans to commercial real estate billionaires, paying themselves huge bonuses if it works and sticking you\u2026 https:\/\/t.co\/atV5Jw5d4I<\/a><\/p>\n \u2014 Austin Campbell (@CampbellJAustin) August 25, 2025<\/a><\/p>\n\n The post US Banks Demand Stablecoin Yield Ban While Paying Depositors Nearly Nothing<\/a> appeared first on CryptoPotato<\/a>.<\/p>","protected":false},"excerpt":{"rendered":" Banks in the United States are lobbying to change new stablecoin regulations under the GENIUS Act, fearing massive deposit outflows as crypto exchanges gain a competitive advantage in offering yield to customers. The legislation, which passed in July, prohibits stablecoin issuers, which could include banks, from paying interest directly to customers. However, crypto exchanges that […]<\/p>\n","protected":false},"author":0,"featured_media":91494,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-91493","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-discovery"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/91493"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=91493"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/91493\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/91494"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=91493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=91493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=91493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Deposit Outflow to Stablecoins<\/h2>\n
Crypto Industry Fights Back<\/h2>\n