Crypto Lobby Pushes Back Against Bank Effort to Rewrite U.S. Stablecoin Law

The crypto manufacture is mounting a counteroffensive against Wall Street bankers’ bid to rewrite the U.S.’ caller stablecoin law, arguing that attempts to rotation backmost halfway provisions of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act would tilt the tract toward accepted banks.

In a missive to Senate Banking Committee leaders dated Aug. 19, the Crypto Council for Innovation and the Blockchain Association urged lawmakers to cull proposals from the American Bankers Association, Bank Policy Institute and authorities banking groups that called for stripping retired Section 16(d) of the instrumentality and banning output programs offered by affiliates of stablecoin issuers.

Section 16(d) allows subsidiaries of state-chartered institutions to behaviour wealth transmission crossed authorities lines successful enactment of stablecoin issuer activities, ensuring holders tin redeem their tokens nationwide without needing abstracted authorities licenses.

Banking groups warned earlier this period that allowing state-chartered, uninsured institutions to contented stablecoins and run nationwide would magnitude to regulatory arbitrage, bypassing authorities licensing regimes, CoinDesk reported earlier.

They besides argued that the instrumentality contains a loophole by banning issuers themselves from offering involvement but not preventing affiliates oregon exchanges from doing so, which they accidental could drain arsenic overmuch arsenic $6.6 trillion successful deposits from the U.S. banking system.

The crypto groups' Aug. 19 missive dismissed those fears arsenic unsupported by observed data. Citing a July 2025 survey by Charles River Associates, the groups said determination is nary statistically important nexus betwixt stablecoin adoption and assemblage slope deposit outflows.

Instead, they pointed out, astir stablecoin reserves stay wrong the fiscal strategy successful commercialized banks and Treasury securities, continuing to enactment lending.

They besides argued that allowing affiliates to stock rewards with stablecoin users ensures just competition, particularly for underbanked consumers who are underserved by accepted banks.

At present, the mean U.S. checking relationship pays conscionable 0.07% APY, acold beneath inflation, portion the Federal Reserve’s benchmark involvement complaint stands astatine 4.25%-4.50%.

“Eliminating these features for stablecoin users, portion allowing them successful the banking sector, would tilt the playing tract successful favour of bequest institutions,” the groups wrote.

The GENIUS Act is law, but the Digital Asset Market Clarity Act, a broader crypto markets model already passed by the House and presently successful the Senate, could inactive reshape stablecoin argumentation earlier regulators draught implementing rules.

Bankers person seized connected that process to propulsion their agenda, portion crypto groups are lobbying to support the instrumentality intact.

Republican Tim Scott of South Carolina, the Senate Banking chairman, said this week helium expects the measure to beryllium finalized by the extremity of September and believes arsenic galore arsenic 18 Democrats whitethorn ballot for it. However, helium acknowledged the anticipation of absorption from Sen. Elizabeth Warren, a Democrat from Massachusetts, and her allies.

Whatever mentation emerges volition request to beryllium reconciled with the House’s Digital Asset Market Clarity Act and could supply the opening bankers privation to revise stablecoin provisions earlier regulators statesman penning rules.