The Blockchain Association, alongside a coalition of over 125 crypto and fintech organizations, sent a strongly worded letter to the U.S. Senate Banking Committee opposing efforts by banking groups to expand the GENIUS Act’s prohibition on stablecoin yields to include third-party platforms and intermediaries. The group argues that such an expansion would stifle innovation and protect traditional banks from fair competition.
The GENIUS Act, enacted earlier in 2025, explicitly bars stablecoin issuers from paying interest or yield directly to holders but deliberately preserves the ability of non-issuer platforms—such as exchanges and wallets—to offer rewards or incentives. Banking lobbyists, including the American Bankers Association, have pushed for a broader interpretation or amendment to close this perceived “loophole,” citing risks of deposit outflows from the traditional banking system. The coalition counters that these concerns are overstated, pointing to independent analyses showing no significant impact on community bank deposits from stablecoin growth between 2019 and 2025.
Blockchain Association CEO Summer Mersinger emphasized that reopening settled compromises in the GENIUS Act would undermine regulatory certainty and consumer benefits, noting that platform rewards are commonplace in competitive markets—like credit card cashback or airline miles—and help users offset inflation amid low traditional bank yields. The letter warns that restricting third-party incentives would lead to greater market concentration and hinder stablecoins’ potential as efficient payment tools.
This lobbying clash highlights ongoing tensions between crypto innovators and traditional finance as lawmakers negotiate broader market structure legislation. The industry views preserving application-layer rewards as essential for stablecoins to compete effectively without direct issuer yields.
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