U.S. Banks Seek Changes to GENIUS Stablecoin Act Due to "Loophole" Concerns

Banking Groups' Concerns: Major U.S. banking groups are lobbying to amend provisions of the GENIUS stablecoin Act, which they believe could negatively impact traditional finance by favoring crypto exchanges over banks.

Key Provisions of the GENIUS Act: The act, passed in July, prohibits stablecoin issuers from paying interest or yield to holders, aiming to maintain stability in the financial system and regulate the growing stablecoin market.

Potential Impact on Banking Sector: Banks warn that allowing crypto exchanges to offer yields could lead to significant outflows from traditional banks, potentially jeopardizing their stability, with estimates suggesting up to $6.6 trillion could shift away.

Crypto Industry Pushback: Representatives from the crypto sector argue that the concerns raised by banks are exaggerated, asserting that the ability for exchanges to offer rewards fosters competition and innovation, rather than being a loophole.