Lucía Peña
Major US banks are lobbying lawmakers to revise provisions of the GENIUS Stablecoin Act, arguing that certain rules could unfairly benefit crypto exchanges over traditional financial institutions.
According to FT on August 25, 2025, leading banking groups are seeking amendments to the GENIUS legislation, which was passed in July 2025 as the first official U.S. stablecoin law. The Act was designed to regulate the billion-dollar stablecoin market and preserve the U.S.’s global leadership in the sector.
One key rule prohibits banks from offering interest or yield on their stablecoins, while crypto exchanges can still reward holders of third-party stablecoins like USDC (USD Coin) and Tether. Banks argue this creates a “loophole” that could drive customers to crypto platforms offering higher returns, potentially destabilizing traditional banking.
A recent Treasury report estimated that yield-bearing stablecoins could move up to $6.6 trillion away from banks, raising concerns about long-term financial stability.
Crypto Industry Pushback: Loophole Supports Innovation
Advocacy groups, including the Crypto Council for Innovation and the Blockchain Association, claim the alleged “loophole” is intentional, designed to foster competition and innovation.
Paul Grewal, Chief Legal Officer at Coinbase, stated that overregulating exchanges could stifle consumer choice and limit innovation, warning that the industry should be allowed to evolve without unnecessary restrictions.
Balancing Stability and Innovation
The GENIUS Act has been hailed as a regulatory milestone, offering clarity to stablecoin issuers. However, the ongoing debate highlights the tension between fostering innovation and protecting traditional banks, emphasizing the need for careful legislative balance.
