Crypto Lobby Slams Bankers’ Push to Rewrite Stablecoin Law
Crypto Industry’s Leading Advocacy Bodies Push Back Against Wall Street Bankers’ Attempt to Roll Back Stablecoin Law
The Crypto Council for Innovation (CCI) and the Blockchain Association have sent a joint letter to the Senate Banking Committee urging lawmakers to reject recommendations from the American Bankers Association (ABA) and state banking groups. The CCI and Blockchain Association argue that these recommendations, which aim to roll back parts of the GENIUS Act, are an attempt to re-litigate issues already settled in months of negotiations.
The GENIUS Act was recently passed into law by the US Congress and aims to regulate stablecoins, a type of digital currency that is pegged to the value of a traditional fiat currency. The law bans stablecoin issuers from offering yields directly, but it does not explicitly prohibit exchanges or affiliates from doing so on their behalf. This has led several US banking groups, including the Bank Policy Institute (BPI), to argue that this creates a loophole that could allow stablecoin issuers and their affiliates to pay yields indirectly.
The Proposed Revisions and Their Impact
According to the BPI, failing to address the proposed revisions would lead to a loss of as much as $6.6 trillion from traditional bank deposits. This, they claim, would threaten the flow of credit to households and businesses. The banking lobby also argues that the current law allows state-chartered banks to issue stablecoins without requiring additional licenses. They want this clause repealed, claiming it creates an uneven playing field.
However, the CCI and Blockchain Association counter these claims by pointing out that payment stablecoins are not regulated in the same way as bank deposits or investment products. Unlike traditional banks, they argue that payment stablecoins do not fund loans and therefore should be subject to different regulations.
The Argument Against Yield-Bearing Stablecoins
The banking lobby also raises concerns about yield-bearing stablecoins, which have distributed over $800 million in total returns to holders so far, according to a recent post by StableWatch. They claim that these yields could drain deposits from community banks and give traditional banks a competitive edge.
However, the crypto industry’s advocacy groups counter that stablecoin growth has no significant link to bank outflows. In their letter, they cite an analysis by Charles River Associates from July 2025, which found no correlation between rapid user adoption of central-bank-pegged coins and local or national banking outlays.
The Total Market Cap of Stablecoins
At present, the total market cap of stablecoins sits at $288 billion. This is a fraction of the US dollar money supply, which stands at over $22 trillion according to the Federal Reserve’s latest figures.
In conclusion, the crypto industry’s leading advocacy bodies are urging lawmakers to reject attempts by Wall Street bankers to roll back parts of the GENIUS Act. They argue that such revisions would create an uneven playing field and stifle innovation in the sector.
The Crypto Industry’s Stance on Regulation
Payment stablecoins, which are used for everyday transactions and cross-border payments, have not directly funded loans or been involved in traditional banking operations. Therefore, it is argued by many experts that they should be subject to different regulations than traditional bank deposits.
Several US lawmakers agree with the crypto industry’s advocacy groups. They believe that the current regulatory framework provides a level playing field for banks and non-traditional financial institutions alike. In particular, they point out Section 16(d) of the law as a key provision, citing its impact on state-chartered banks’ abilities to expand their services.
Regulatory consistency helps maintain stability in the payment market by reducing complexities associated with different states having varying regulatory requirements for stablecoin operators. Moreover, proponents of this view argue it aligns well with national financial standards since they encourage the interstate growth and operation of institutions with state charters across multiple locations without facing additional or redundant licensing demands.
Conclusion
Ultimately, a comprehensive discussion on regulatory frameworks between key stakeholders such as representatives from traditional finance sectors – particularly the banking industry – must continue to evolve through ongoing negotiations.
