Crypto Groups Push Back on Bankers’ Calls to Amend GENIUS Act
Commentary by Gage Raju-Salicki
The Blockchain Association and the Crypto Council for Innovation pressed Senate Banking Committee leaders to reject efforts by banking trade groups to amend the recently enacted GENIUS Act.
The response follows a recent letter from the Bank Policy Institute—warning that loopholes in the GENIUS Act could allow exchanges and affiliates to evade the statute’s ban on paying interest or yield on stablecoins—and another from the American Bankers Association, joined by state bankers associations, urging lawmakers to close those loopholes. (See previous coverage.)
In their joint letter, the BlockChain and Crypto associations disputed claims that yield-bearing stablecoins could trigger trillions in deposit outflows. They pointed to a 2025 analysis that found no measurable link between stablecoin adoption and community bank deposits. They also noted that most reserves remain in commercial banks or Treasuries, thereby continuing to support credit and liquidity in the traditional system. They also defended consumer access to rewards programs, arguing that such benefits drive competition and provide meaningful alternatives to Americans who currently face meager returns from traditional savings and checking accounts.
The BlockChain and Crypto associations further emphasized the importance of preserving Section 16(d) ("State-Chartered Depository Institutions") of the GENIUS Act, which ensures that stablecoins can be redeemed nationwide without duplicative state licensing. They warned that removing the provision would create a "balkanized" regime of conflicting state rules and restrict consumer access to digital financial services. They rejected proposals to ban nonfinancial firms from issuing stablecoins, calling such a step an anti-competitive overreach that ignores the Act’s strict requirements for fully capitalized, standalone issuers.
The BlockChain and Crypto associations urged lawmakers to keep the GENIUS Act intact because it strikes the right balance between consumer protection and innovation.
Commentary
The GENIUS Act is now law. Providing consumer access to rewards programs would drive competition, perhaps benefitting consumers even more in the end if traditional banks are forced to adapt to such a competitive regime of consumer rewards.
The concept of a balkanized regime is a serious concern. Ironically, this balkanization concern is what motivated countless uniform state acts and federal law. Undoing this provision would be damaging to the goal of the GENIUS Act itself.
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The American Bankers Association and state bankers associations from all 50 states urged leaders of the Senate Banking Committee and its Digital Assets Subcommittee to address "loopholes" in the recently enacted GENIUS Act as part of upcoming digital asset market structure legislation.