Banks Urged to Embrace GENIUS Act, Avoid Stifling Stablecoin Competition

The bipartisan GENIUS Act, now law, aims to bolster consumer safeguards and regulatory oversight in the financial markets through stablecoin adoption.
Major legacy financial institutions express concerns over stablecoin innovations potentially threatening their profits and urge Congress to amend the legislation.
Lobbyists worry stablecoins could lead to significant deposit outflows from community banks, with potential losses estimated at $6.6 trillion.
An analysis by Charles River Associates shows no significant link between stablecoin adoption and community bank deposit outflows.
Stablecoin reserves usually remain within the traditional financial system, supporting liquidity and credit.
The Treasury Department suggests stablecoins might increase U.S. money supply inflows over time, benefiting the economy without affecting credit availability.
There are calls to repeal Section 16(d) of the GENIUS Act, which would hinder interstate commerce by complicating stablecoin operations across state lines.
Current interest rates: Federal Reserve's target is above 4%, while checking accounts average 0.07% and savings accounts 0.39%.
Stablecoin rewards can enhance competition, prompting traditional banks to offer better value to consumers.
The GENIUS Act demands one-to-one reserves in cash or Treasuries, strict licensing, supervision, and transparency for stablecoins.
Stablecoins are seen as an innovation that maintains banking stability while fostering consumer competition.