Switzerland's banking industry is advocating for a streamlined regulatory pathway that would allow banks to issue stablecoins directly, challenging a proposed draft law that would force them to operate through a separate payment institution. The Swiss Bankers Association (SBA) argues this "licensing cascade" is unjustified given banks' existing stringent oversight. The proposed amendment to the Financial Institutions Act (FinIA) would create two new FINMA-supervised categories: a payment institution for stablecoin issuance and a crypto institution for custody and trading activities.
The draft, under consultation until February 6, 2026, removes the previous CHF 100 million cap on client funds for issuers and mandates that regulated stablecoins be fully backed by equivalent assets, redeemable at par. The banking lobby links its stance to a 2025 expert report, warning that large-scale stablecoin issuance could drain bank deposits unless they are explicitly backed by them. Pressure is mounting on Swiss authorities as the EU's Markets in Crypto-Assets Regulation (MiCAR) is already in force, with Swiss Franc-pegged stablecoins representing a mere $40 million (0.13%) of the global market.
Simultaneously, in the United States, White House negotiations on stablecoin regulation have stalled ahead of a March 1 deadline, primarily due to a clash between banks and crypto firms over yield. Banks are pushing for a broad prohibition on rewards tied to holding or using stablecoins, arguing such incentives threaten traditional banking liquidity and could trigger deposit outflows. Crypto industry representatives are resisting these limits, contending that competitive on-chain rewards are essential for market growth and innovation.
The debate has slowed progress on broader market structure legislation, with the House-passed CLARITY Act awaiting Senate action. The impasse was highlighted when Coinbase withdrew its support for the proposed legislation due to the yield prohibitions. While both sides remain engaged in talks, the fundamental disagreement over stablecoin rewards continues to define the path forward for U.S. regulation.
