TLDR
- Over 250K letters were sent to U.S. senators urging stablecoin yield protection.
- Stand With Crypto defends stablecoin rewards, countering banking lobbyists.
- Banking groups argue stablecoin yields threaten traditional deposits and funds.
- U.S. government shutdown delays final regulations on the GENIUS Act.
The fight over the future of stablecoin yields in the U.S. has intensified, with more than 250,000 letters sent to U.S. senators. The letters, organized by the pro-crypto group Stand With Crypto, are a direct response to lobbying efforts by Wall Street banks. The letters urge lawmakers to maintain the current language of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which regulates stablecoins and their ability to offer rewards.
Stand With Crypto Mobilizes Thousands to Defend Stablecoin Yields
Stand With Crypto, a member-driven organization that advocates for digital asset protection, has pushed back against calls from banking groups to limit stablecoin yields. These efforts aim to close what banks consider a loophole in the GENIUS Act that allows stablecoin issuers’ affiliates or exchanges to offer rewards. Stand With Crypto’s letter campaign has mobilized over 250,000 participants to send messages to lawmakers, arguing that removing these rewards would harm consumers.
The group’s message contrasts stablecoin yield offerings with the rewards programs offered by traditional banks, such as credit card incentives. Stand With Crypto emphasizes that the ability for stablecoin issuers and affiliates to offer yield on digital assets is an important feature for consumers. The letter urges senators not to follow the banking industry’s push to restrict these opportunities.
Banking Industry Pushes for Restrictions on Stablecoin Yields
The banking industry, represented by groups like the American Bankers Association, has been lobbying for changes to the GENIUS Act. These organizations argue that the stablecoin yield offerings could destabilize traditional financial systems, including deposits and money-market funds.
Banks claim that stablecoin rewards could lead to a shift in consumer behavior, with people potentially withdrawing funds from banks to earn higher returns from stablecoin platforms.
In August, the banking groups launched an effort to amend the GENIUS Act, specifically targeting the section that allows affiliates or exchanges related to stablecoin issuers to offer yields. Their campaign calls for lawmakers to close the perceived loophole, limiting the ability of related entities to offer rewards on stablecoins.
Stand With Crypto Fights to Preserve Current Legislation
Stand With Crypto has voiced strong opposition to any changes in the GENIUS Act. The group’s letter campaign, which has now reached more than 250,000 letters sent to U.S. senators, highlights the consumer benefits of allowing stablecoin issuers and their affiliates to offer yield. The letter stresses that these rewards are similar to credit card or bank loyalty programs and should be treated equally.
Brian Armstrong’s Coinbase, which helped establish Stand With Crypto, has been a prominent figure in defending the interests of the digital asset industry. The group insists that the current structure of the GENIUS Act, which blocks direct yield offerings from stablecoin issuers but allows related parties to provide rewards, strikes the right balance between regulation and consumer freedom.
U.S. Government Shutdown Stalls Regulatory Progress
The debate over stablecoin yields comes as the U.S. government faces a partial shutdown, which has delayed regulatory implementation of the GENIUS Act. The Treasury Department and other financial regulators were in the process of drafting rules to enforce the new law, but the shutdown has put much of this work on hold.
Despite the delay in regulations, the legal and regulatory battle over stablecoins continues to heat up. While some lawmakers remain focused on the stability of traditional banking systems, others are looking for ways to accommodate the growing digital asset sector without stifling innovation.
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