Banks make compelling case that GENIUS Act bans all stablecoin interest - Ledger Insights - blockchain for enterprise

Banks Argue GENIUS Act Bans All Stablecoin Interest

US banking industry groups have presented strong arguments that the GENIUS Act enforces a comprehensive ban on paying interest or rewards on stablecoins. This legislation aims to protect traditional bank deposits, which are crucial for financing the economy.

Impact on Crypto Exchanges and Competitors

Crypto exchanges like Coinbase currently offer rewards on stablecoin balances that significantly exceed typical bank deposit rates, directly competing for deposits. However, a narrow reading of the Act might allow companies such as PayPal to continue providing rewards on their own stablecoins, since they are not the official issuers.

Scope of the GENIUS Act

The GENIUS Act prohibits stablecoin issuers from paying any interest or rewards related to stablecoin use or balances. The legislation’s wording did not explicitly cover indirect payments made by non-issuers like Coinbase.

Industry Response to Regulatory Guidance

In response to a request from the US Treasury for input on detailed regulations, joint trade groups from the banking sector offered their analysis. These groups emphasize that the GENIUS Act, though broad in its original language, should be implemented to fully uphold the ban on interest payments related to stablecoins.

“Both the statutory language and the legislation’s objectives support a broad interpretation of the interest ban.”

Coinbase also submitted feedback, urging the Treasury to adhere to the Act “as written.” However, the joint trade groups’ interpretation suggests the original text does not support Coinbase’s stance.

Trade Groups Involved

Author's summary: US banking groups contend that the GENIUS Act outright bans stablecoin interest payments, challenging crypto firms like Coinbase that offer such rewards.

more

Ledger Insights Ledger Insights — 2025-11-07

More News