Major U.S. banking associations—including the Bank Policy Institute (BPI), American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America, and Financial Services Forum—are urgently lobbying Congress to amend the GENIUS Act. They warn that a regulatory loophole allows stablecoin issuers to bypass restrictions on interest payments by distributing yields through affiliated exchanges or partners.
The GENIUS Act, signed into law by President Trump on July 18, 2025, explicitly bans issuers from directly paying interest but does not prohibit third-party entities from offering rewards. Banking groups contend this gap could trigger up to $6.6 trillion in deposit outflows from traditional banks, citing U.S. Treasury projections. Such outflows may elevate interest rates, reduce loan availability, and increase borrowing costs for households and businesses.
Notably, companies like Coinbase and PayPal continue offering stablecoin rewards programs. Coinbase CEO Brian Armstrong stated, "We are not the issuer... we pay rewards"—leveraging the affiliate exemption. The stablecoin market, valued at $280.2 billion, is dominated by Tether ($165B) and USDC ($66.4B), which collectively control over 80% of the sector.