Community Banks Want Congress to Clamp Down on Yield-Bearing Stablecoins

[johnblockbuster]

A coalition of U.S. community bankers is urging lawmakers to amend the GENIUS Act, arguing it contains a loophole that allows stablecoins to compete with traditional bank deposits. In a letter to the Senate, the Community Bankers Council of the American Bankers Association said stablecoin issuers are effectively offering yield to tokenholders through third-party platforms.

Although the GENIUS Act explicitly bans stablecoin issuers from paying interest, bankers claim the restriction is being bypassed via crypto exchanges and affiliated partners. They warn that if deposits migrate from community banks to yield-bearing stablecoins, it could reduce lending to small businesses, farmers, students, and home buyers.

[madmax]

“protecting small businesses” somehow always shows up when deposits are at risk