A group of US community bankers want Congress to amend the GENIUS Act to prevent stablecoin issuers from offering yield through third parties. The American Bankers Association’s Community Bankers Council argues that this loophole could impact lending abilities, putting stablecoins in competition with traditional bank savings accounts.

The council urges lawmakers to prohibit affiliates and partners of stablecoin issuers from offering interest in the crypto market. They claim these entities are not equipped to fill the lending gap and cannot provide products insured by regulators. The push for changes is part of a broader effort by bank advocacy groups to amend the GENIUS Act.

The Banking Policy Institute, led by JPMorgan CEO Jamie Dimon, has also called for closing the stablecoin yield loophole. They argue that this loophole could lead to significant deposit outflows from the traditional banking system. However, major crypto advocacy groups oppose these changes, claiming that payment stablecoins are not used to fund loans and that revisions could stifle innovation and consumer choice.

Read more at Cointelegraph: Community Banks Want GENIUS Act Yield ‘Loophole’ Closed