US bank groups ask to close GENIUS Act’s stablecoin yield ‘loophole’

Key Points

1. The GENIUS Act prohibits stablecoin issuers like Circle’s USDC from offering rewards to holders on exchanges such as Coinbase and Kraken.

2. Banking groups argue that allowing interest or yield on stablecoins could lead to $6.6 trillion in deposit outflows, citing a US Treasury report.

3. They warn this could undermine the credit system, increase deposit flight risk, and raise costs for loans and Main Street businesses.

4. The stablecoin market is currently valued at $280.2 billion, dominated by Tether (USDT) and USDC, with projections to grow to $2 trillion by 2028.

5. The GENIUS Act was signed into law on July 18, aiming to preserve the dollar’s role as the world’s leading reserve currency.