US Banks Demand Stablecoin Yield Ban While Paying Depositors Nearly Nothing

Banks in america are lobbying to alter new stablecoin rules beneath the GENIUS Act, fearing large deposit outflows as crypto exchanges achieve a aggressive benefit in providing yield to clients.

The legislation, which handed in July, prohibits stablecoin issuers, which could include banks, from paying curiosity on to clients. Nonetheless, crypto exchanges that maintain stablecoins, comparable to USDT and USDC, can provide yields and rewards on them.

Banking lobbies, such because the American Bankers Affiliation, warned that this creates a “loophole.” On the similar time, banks, which historically provide a lot decrease rates of interest, worry it creates an “uneven enjoying area,” according to the Monetary Occasions.

Deposit Outflow to Stablecoins

The banking business representatives, citing an April Treasury report, claimed that stablecoins might drain $6.6 trillion in financial institution deposits.

They warned of “larger deposit flight danger, particularly in instances of stress, that may undermine credit score creation all through the economic system,” which might end in “greater rates of interest, fewer loans and elevated prices for Primary Avenue companies and households.”

Over the weekend, Politico reported that the monetary world is “barreling towards a lobbying civil conflict in Washington.”

The bankers and lobbyists, who usually see crypto as a risk to their companies, need to block all crypto corporations from paying yield to clients who maintain stablecoins, it said. In addition they need to repeal a bit of the regulation that they are saying “permits state-chartered uninsured depository establishments to function nationwide with out correct supervision.”

The banks “need to hold it for themselves,” which is “completely outrageous rent-seeking,” stated crypto investor Ryan Sean Adams.

“Stablecoin yield belongs to the individuals, not the banks.”

In the meantime, Bitwise CIO Matt Hougan noticed the humorous facet, observing the paltry rates of interest that main banks are providing.

I feel JPMorgan Chase is confused. Can somebody inform them that the 0% curiosity rule is just for stablecoins, not financial institution accounts? https://t.co/cXIuWJJMeb pic.twitter.com/oj8b1zC3cC

— Matt Hougan (@Matt_Hougan) August 25, 2025

Crypto Business Fights Again

Former commissioner of the Commodity Futures Buying and selling Fee and present Blockchain Affiliation CEO, Summer time Mersinger, pointed out on Monday that the GENIUS Act is “settled regulation.”

“There was sturdy debate on the Hill, and the way in which this invoice got here out was a compromise from policymakers,”

“This was no loophole and you recognize it,” Coinbase chief authorized officer Paul Grewal wrote on X in response to the bankers’ assertion.

In the meantime, the Crypto Council for Innovation wrote that banks had been looking for to create an “uncompetitive fee stablecoin atmosphere, defending banks on the expense of broader business progress, competitors, and client selection.”

Bowing to banks’ calls for would “tilt the enjoying area in favour of legacy establishments, notably bigger banks, that routinely fail to ship aggressive returns and deprive customers of significant selection,” the associations added.

Former Paxos guide Austin Campbell stated banks had been making an attempt to “cripple stablecoins” in order that they may proceed to,

“Pay you 0% on deposits whereas making dangerous loans to business actual property billionaires, paying themselves enormous bonuses if it really works and sticking you with the losses if it doesn’t.”

A well timed reminder of why this all is essential as banks start lobbying to cripple stablecoins in order that they will proceed to:

1 – Pay you 0% on deposits whereas making dangerous loans to business actual property billionaires, paying themselves enormous bonuses if it really works and sticking you… https://t.co/atV5Jw5d4I

— Austin Campbell (@CampbellJAustin) August 25, 2025