Two prominent cryptocurrency groups are accusing banks of attempting to “relitigate” issues within the stablecoin bill that President Trump signed into law last month.
The Crypto Council for Innovation (CCI) and Blockchain Association argued in a letter to leaders of the Senate Banking Committee on Tuesday that they should reject the push by banks to tweak language in the GENIUS Act on rewards payments, state powers and limits on nonbank stablecoin issuers.
“As you are aware, these matters were the subject of extensive debate, negotiation, and compromise during the legislative process,” CCI CEO Ji Hun Kim and Blockchain Association CEO Summer Mersinger wrote.
“The Letters unfortunately seek to create an uncompetitive payment stablecoin environment, protecting banks at the expense of broader industry growth, competition, and consumer choice, which form the bedrock of America’s vibrant financial and innovation landscape,” they continued.
The American Bankers Association and its counterparts in the states called on senators last week to extend a provision barring interest payments on stablecoins to cover other digital asset actors.
They suggested this provision can be “easily bypassed” when crypto exchanges or affiliates offer rewards to stablecoin holders.
The Bank Policy Institute (BPI) similarly urged lawmakers to close the “interest loophole” last week, arguing stablecoins cannot act as substitutes for bank deposits, money market funds or investment products.
“These distinctions are why payment stablecoins should not pay interest the way highly regulated and supervised banks do on deposits or offer yield as money market funds do,” the BPI wrote.
They pointed to a Treasury Department report from earlier this year that indicated stablecoins could result in $6.6 trillion in deposit outflows from banks.
The crypto groups pushed back on these arguments, citing a recent analysis that found stablecoin adoption had no significant impact on deposit outflows. They also argued the ability to offer rewards creates a more “level playing field” for the industry to compete with banks.
The two sides are also warring over GENIUS Act provisions impacting state decisions and restrictions on nonbanks’ abilities to offer stablecoins.
The banking industry is arguing to repeal a section of the law that restricts the authority of states to bar uninsured out-of-state institutions from operating across state lines.
The crypto industry contends this is a “necessary safeguard to protect stablecoin holders” by allowing them to redeem the digital tokens from holders in other states and without which the system would become a “fragmented, balkanized regulatory regime.”
Another point of contention is the GENIUS Act’s existing limits on which nonbank financial institutions can issue stablecoins. The law currently bars public nonbank companies from getting in on the action but still allows private firms to do so.
Banks argue this is another “loophole” that threatens to upend the separation between banking and commerce, while the crypto groups suggest the law “strikes the right balance.”
The push to amend the GENIUS Act comes as lawmakers gear up to consider broader crypto market structure legislation in the fall when they return from their August recess.
In July, the House passed its version of the market structure bill, the Digital Asset Market Clarity Act, which included amendments to the stablecoin law. However, the Senate appears poised to drive ahead with its own legislation after Republican lawmakers released a discussion draft last month.
