GENIUS Act Bombshell? Banking Groups Demand Stablecoin Interest Loophole Close Before Cash Flees
Main Idea
U.S. banking groups are lobbying to address a loophole in the GENIUS Act that allows stablecoin issuers to offer interest, which they argue could destabilize traditional banking deposits and increase borrowing costs.
Key Points
1. Bank trade groups, including the American Financial Services Forum and Independent Community Bankers of America (ICBA), are pushing for changes to the GENIUS Act to close a loophole permitting stablecoin issuers to offer yield.
2. The groups argue that payment stablecoins are not subject to the same restrictions as traditional bank deposits, potentially incentivizing a shift away from bank deposits and increasing borrowing costs for Main Street borrowers.
3. The debate over the GENIUS Act could influence future U.S. digital asset oversight and the global competitiveness of U.S.-issued stablecoins, especially in markets where yield-bearing tokens are permitted.
4. Changes to stablecoin regulations could impact industries such as e-commerce, remittance providers, and decentralized finance (DeFi) protocols.
Description
Key Takeaways: U.S. banking associations want Congress to close an interest-payment loophole in the GENIUS Act for stablecoin affiliates. The debate could expand into a broader discussion on the role of U.S. stablecoins in international payment systems. Future political shifts may influence whether current restrictions are tightened, relaxed, or adapted to global regulatory norms. Major U.S. banking trade groups are calling for Congress to block stablecoin issuers and affiliated firms from payin...
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