Crypto Groups Urge Senate to Maintain Current U.S. Stablecoin Law
The crypto industry is actively opposing changes to the U.S. stablecoin law, the GENIUS Act, which were proposed by Wall Street bankers. Key points include:
- The Crypto Council for Innovation and the Blockchain Association sent a letter on August 19 urging lawmakers to reject proposals that would eliminate Section 16(d), allowing state-chartered institutions to conduct interstate money transmission for stablecoin activities.
- Banking groups argue that this regulation could lead to regulatory arbitrage and potentially drain $6.6 trillion in deposits from U.S. banks due to loopholes regarding interest offerings by affiliates of stablecoin issuers.
- The crypto organizations refute these concerns, citing a study indicating no significant correlation between stablecoin adoption and community bank deposit outflows.
- They emphasize that stablecoin reserves primarily remain within commercial banks and Treasury securities, supporting lending.
- Current average APY for U.S. checking accounts is 0.07%, while the Federal Reserve’s benchmark interest rate is between 4.25% and 4.50%.
- Crypto groups argue that denying yield programs to stablecoin users while allowing them for traditional banks creates an unlevel playing field.
- The Digital Asset Market Clarity Act, which has passed the House, may further influence stablecoin policy as it progresses through the Senate.
- Senate Banking chairman Tim Scott anticipates finalization of the bill by the end of September, with potential support from Democratic members, though some resistance is expected.
The outcome of these legislative discussions could significantly impact the future regulations surrounding stablecoins.