Leading cryptocurrency advocacy groups have mounted a campaign against banking industry proposals to revise the U.S. GENIUS Act, the landmark stablecoin regulation enacted last month. In a joint letter to the Senate Banking Committee, the Crypto Council for Innovation (CCI) and the Blockchain Association cautioned lawmakers against amendments championed by the American Bankers Association (ABA) and state banking groups.
The ABA’s recommendations, backed by the Bank Policy Institute and other trade bodies, target a clause that allows state-chartered banks’ subsidiaries to issue stablecoins across state boundaries without additional licensing. Bankers argue the provision creates a “yield loophole,” enabling affiliates to indirectly offer interest on stablecoin deposits, competing unfairly with traditional bank accounts.
CCI and the Blockchain Association countered that repealing Section 16(d) would reintroduce a fragmented patchwork of state rules, undermining the unified framework purpose-built to support nationwide commerce. Their letter emphasized that payment stablecoins differ fundamentally from bank deposits and money-market funds, as they are not used to fund loans and operate under distinct risk profiles.
The advocacy groups also highlighted a Charles River Associates analysis showing negligible impact of stablecoin growth on bank deposit levels. They warned that bank lobby attempts to constrain stablecoin innovation risk stifling competition and limiting consumer choice.
“Stablecoins are not bank deposits,” the groups wrote. “They serve a distinct function in digital finance, enabling instant, borderless settlement without relying on credit extension.”
The debate underscores tension between traditional financial institutions seeking to protect deposit bases and the crypto sector’s drive for regulatory clarity. With stablecoins reaching a market cap of $288 billion, industry watchers anticipate further clashes over yield rules as DeFi and blockchain use cases expand.
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