A coalition of 125+ crypto companies, including Coinbase and Gemini, wage war against US banking lobbyists over the right to pay interest on stablecoin deposits. The GENIUS Act prohibits this, but a loophole allows third-party platforms to pass on yields, sparking fears of regulatory arbitrage and potential $6.6 trillion bank deposit outflows.

The banking lobby argues that allowing unregulated fintech platforms to offer high yields on stablecoins poses a systemic risk to traditional financial systems. They warn of massive capital flight, leading to a hollowed-out capital base for banks, forcing them to reduce lending capacity and increase borrowing costs for Americans.

The crypto coalition urges lawmakers to reject expanding the GENIUS Act, warning that reopening the issue would introduce unnecessary risk and undermine market predictability. They dismiss banks’ stability concerns as protectionist, aimed at preserving low-interest deposit monopolies and preventing consumers from accessing Treasury market yields.

Stablecoin rewards programs allow platforms to share value directly with users, providing households with higher-rate environments and protection from inflation. Crypto firms argue that banks are trying to protect profit margins by preventing consumers from accessing the 4% yields available in the Treasury market.

Read more at Yahoo Finance: Hundreds of Crypto Firms Slam US Bank’s Lobby to Prohibit Stablecoin Yields