More than 200 community bank leaders expressed concern that while the law prohibits stablecoin issuers from paying interest, a safeguard to ensure deposits fund loans for families and small businesses, some companies are circumventing Congressional intent through indirect payments.
The ABA's Community Bankers Council is calling on Congress to clarify that the interest prohibition applies to stablecoin issuers' affiliates and partners.
"Anything less will put economic growth and local communities at risk," the letter concludes.
"If there were to be a material flight from the banking system, I would be taking action," Gould said, noting that "highly elected officials" and trade associations would also intervene.
Crypto industry pushbackSaravanan Pandian, CEO of crypto exchange KoinBX, told Decrypt that banks’ push to review the GENIUS Act points to traditional caution toward digital assets, but warned that "strict policies can push activity towards unverified channels, which can ultimately end up being challenging for all stakeholders."
He expressed hope for a system where “banks and crypto platforms can exist through mutual co-operation and innovate together.”
Nitesh Mishra, co-founder and CTO at hedging platform ChaiDEX, told Decrypt the $6.6 trillion risk is "somewhat blown out of proportion," but acknowledged banks are "directionally right" since stablecoins provide similar returns "without the equivalent rules faced by the banks."
Mishra called for "clear definition between interest and reward" and urged regulators to "impose robust reserve, liquidity, and disclosure standards plus activity-based licensing for nonbank issuers, so banks and stablecoin firms compete under comparable rules without stifling innovation."
