Banking Groups Warn That Yield-Bearing Stablecoins Like USDC Could Threaten US Credit System Stability
Main Idea
US banking groups are warning that yield-bearing stablecoins like USDC could threaten the banking system by causing deposit flight, and are urging Congress to close loopholes in the GENIUS Act.
Key Points
1. The GENIUS Act prohibits stablecoin issuers from offering interest or yield to token holders but does not explicitly ban crypto exchanges or affiliated businesses from doing so.
2. Banking groups argue that yield-bearing stablecoins could lead to deposit flight from traditional banks, posing a risk to the banking system.
3. Stablecoins differ from bank deposits in terms of financial stability, as they are not backed by the same regulatory safeguards.
4. The GENIUS Act aims to regulate stablecoins but may have loopholes that need addressing.
5. The debate over stablecoins and the GENIUS Act is ongoing, with concerns about their impact on traditional banking.
Description
US banking groups are urging Congress to close a loophole in the GENIUS Act that allows stablecoin issuers to offer yields through affiliates, which they believe could undermine the banking
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