A broad coalition of 125 crypto and fintech groups is pushing back against efforts by the banking industry to broaden a ban on stablecoin yields, warning Congress that doing so would limit consumer choice and shield traditional banks from competition.
In a letter sent Wednesday to Senate Banking Committee Chair Tim Scott and Ranking Member Elizabeth Warren, the coalition — led by the Blockchain Association — said attempts to reinterpret the GENIUS Act go well beyond what lawmakers originally agreed to.
“This is not a technical fix or a consumer-protection measure,” the letter said. “It’s an attempt to lock in protection for incumbent banks.”
At issue is whether platforms like Coinbase and PayPal should be allowed to offer rewards — such as loyalty points, discounts, or third-party incentives — to users who transact with stablecoins. The GENIUS Act already bans stablecoin issuers from paying interest directly to holders, but the coalition argues Congress intentionally left room for apps and intermediaries to offer rewards at the product level.
Banking groups, led by the American Bankers Association, have urged regulators to interpret “interest or yield” broadly, sweeping in nearly any economic benefit tied to stablecoin use. Crypto groups say that approach would create an uneven playing field, especially since banks face no similar limits on credit-card rewards or payment incentives.
The coalition pointed to the gap between interest rates and what consumers actually earn. While the federal funds rate sits around 3.5% to 3.75%, average checking accounts yield just 0.07%, and savings accounts around 0.40%.
“Stablecoin rewards allow platforms to share value directly with users,” the letter said, “instead of letting inflation quietly erode household savings.”
Pushing back on bank fears
Banking groups have argued that allowing stablecoin rewards could trigger mass deposit outflows, drawing comparisons to the money-market fund disruptions of the early 1980s. Treasury estimates have suggested yield-bearing stablecoins could lead to as much as $6.6 trillion in deposit flight.
The coalition rejected those claims, citing analysis from Charles River Associates, which found no evidence of unusual deposit outflows from community banks between 2019 and 2025 — a period that coincided with rapid stablecoin growth.
The letter also questioned how banks can warn of deposit shortages while holding roughly $2.9 trillion in reserve balances, much of it parked at the Federal Reserve earning interest rather than flowing into loans.
What’s at stake
Beyond the yield debate itself, the groups warned that reopening the issue could undermine confidence in Congress’s ability to deliver durable rules.
If lawmakers revisit compromises before implementation even begins, the coalition argued, it sends a signal that nothing is truly settled — discouraging investment, innovation, and long-term planning.
Rewards and incentives, the letter noted, are standard tools in competitive markets with strong network effects — especially payments, where new systems must overcome entrenched habits. Stablecoins already offer faster settlement and lower costs, but adoption still depends on giving users a reason to switch.
The signatories include Coinbase, PayPal, Stripe, Ripple, Kraken, advocacy group Stand With Crypto across 20 states, and major investment firms such as Andreessen Horowitz and Paradigm.
The coalition urged lawmakers to stick to the framework already passed, arguing that preserving the balance struck in GENIUS is essential for consumer choice, competition, and bipartisan credibility — particularly as stablecoin circulation climbs past $310 billion.
