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Community Banks Want GENIUS Act Yield “Loophole” Closed

Cointelegraph
US community banks are urging Congress to close a perceived loophole in the GENIUS Act that allows stablecoin issuers to indirectly offer yield, competing with bank deposits.

Summary

The American Bankers Association’s Community Bankers Council sent a letter to the Senate demanding changes to the GENIUS Act to close a perceived loophole. The Act was intended to ban stablecoin issuers from offering interest or yield to holders, preventing competition with bank savings accounts. However, the Council argues that exchanges like Coinbase and Kraken exploit this by offering rewards to stablecoin holders through third parties, effectively undermining the law. The group of over 200 community bank leaders warned that if billions are displaced from community bank lending due to this activity, small businesses, farmers, students, and homebuyers will suffer. They requested that lawmakers prohibit affiliates and partners of stablecoin issuers from offering interest within pending crypto market structure legislation. This follows similar pressure from other banking groups, including the Banking Policy Institute, which warned of potential $6.6 trillion in deposit outflows, though crypto advocacy groups oppose the revisions, citing stifled innovation and consumer choice.

(Source:Cointelegraph)