Bank Executives Urge Closing Digital Asset Interest Loophole

Over 3,000 bank executives from across the United States urged Senate lawmakers to expand statutory prohibitions on stablecoin interest payments to include digital asset exchanges and brokers.

In their letter to the Senate, the bankers warned, that while the GENIUS Act prohibits payment stablecoin issuers from offering interest on investments, a regulatory gap remains regarding other market participants. The bankers argued that the current framework allows exchanges and affiliates to offer interest to customers, effectively treating stablecoins as stores of value rather than payment instruments. They said that failing to extend interest payment restrictions to secondary market actors allows them to circumvent the intent of the original legislation.

The bankers maintained that closing this loophole is essential to minimize "unintended consequences for customers ... and the broader economy," ensuring that the shift toward digital assets does not come at the cost of credit access for local communities. The bankers said that crypto businesses, unlike traditional banks, which reinvest deposits directly into their communities, siphon capital away from local economies. They asserted that if funds migrate to digital asset platforms to chase yield, there will be "less money available" for essential credit needs, including "car loans, agricultural loans, mortgages, and small business borrowing." The bankers urged the Senate to strengthen digital asset market structure legislation by explicitly applying interest restrictions to brokers, dealers, and other affiliates.