The conflict over stablecoin yields, ignited by the GENIUS Act of 2025, has escalated into a full-scale regulatory battle between traditional banks and cryptocurrency platforms. The law prohibits stablecoin issuers like Circle from paying interest directly to holders but left a potential opening for third‑party platforms—exchanges such as Coinbase and Kraken—to offer rewards on stablecoin deposits. In the months following the act, crypto platforms began paying yields of 4% to 5% annually on USDC and similar assets, attracting users seeking to offset inflation. These rewards are generated from reserve assets, primarily U.S. Treasury bills, effectively replicating a bank’s model but without brick‑and‑mortar overhead.
Traditional banking groups, including the Bank Policy Institute and the American Bankers Association, argue that these rewards constitute interest on uninsured deposits and could drain trillions from the banking system, reducing lending capacity and destabilizing finance. Crypto firms counter that banks are defending a monopoly over low‑cost deposits. A coalition of over 125 companies sent a letter to Congress defending the rewards, and Coinbase CEO Brian Armstrong warned that restricting yields would cede strategic advantage to jurisdictions like China. Kraken CEO David Ripley framed the issue as a matter of consumer freedom, noting that near‑zero bank savings rates represent a value extraction that stablecoins correct.
Senators Thom Tillis and Angela Alsobrooks attempted a compromise with an amendment banning rewards “economically or functionally equivalent” to interest on deposits while allowing rewards tied to genuine platform activity. Banking trade groups rejected it, issuing a joint statement that the amendment falls short and still enables circumvention through membership programs. In contrast, Coinbase, Circle, and other crypto firms accepted the language. The banking sector’s refusal to compromise reveals an intent to seek a total ban, eliminating any competing product that offers market returns.
Circle CEO Jeremy Allaire later emphasized that the real debate is “whether distributors can offer rewards” and suggested alternative incentive models such as loyalty points, fee rebates, or platform benefits that do not mimic issuer interest. He stressed that stablecoins are taking an “internet software shape” and that traditional finance must coexist with innovation. Meanwhile, the Office of the Comptroller of the Currency proposed implementation rules that could block platforms from paying yield on custodial stablecoins, with banks lobbying for a broad interpretation.
The systemic risk argument remains contested. Crypto firms note that yield‑paying stablecoin issuers hold reserves in highly liquid assets like Treasury bills and overnight repos, avoiding fractional‑reserve vulnerabilities. A ban, they argue, would push yield‑seeking users toward less regulated offshore platforms. The Federal Deposit Insurance Corporation also issued a proposed rule under the GENIUS Act, focusing on Bank Secrecy Act and sanctions compliance, with a new consultation process giving FinCEN a stronger oversight role before enforcement actions against issuers.
Separately, Ledger added native support for the ADI token, the gas token of the ADI Chain network linked to the UAE and focused on regulated stablecoin settlement. The network, backed by Sirius International Holding, supports the DDSC stablecoin ecosystem launched with First Abu Dhabi Bank and targets cross‑border payments and trade settlement. This integration highlights the global expansion of stablecoin infrastructure even as U.S. regulation remains unresolved.
