Banking associations have urged the Senate to repeal parts of the new stablecoin law, seeking restrictions on interest-bearing stablecoins and nationwide operation by uninsured state-chartered issuers; crypto lobbyists are pushing back, arguing these changes would stifle competition and consumer choice.
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Top bankers want repeal of key GENIUS Act provisions affecting stablecoin interest and state-chartered issuers
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Crypto trade groups counter that rescinding those provisions risks tilting the market toward legacy banks and limiting consumer options.
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Bankers cite a Treasury Department report estimating up to $6.6 trillion migration; crypto groups call that projection unsupported by observed data.
Meta description: Stablecoin law repeal — banking associations press Senate to undo GENIUS Act rules; crypto lobbyists push back. Read the latest analysis from COINOTAG.
What is the banking push to repeal the stablecoin law?
The banking associations’ push seeks to repeal or revise GENIUS Act provisions that allow uninsured state-chartered stablecoin issuers to operate nationwide and permit exchanges to offer yield on stablecoin deposits. They argue these features threaten bank deposits and state authority. COINOTAG reporting shows the dispute centers on market structure and consumer protection.
How are crypto lobbyists responding to the banking demands?
Crypto groups including the Blockchain Association and the Crypto Council for Innovation formally urged the Senate Banking Committee to reject bank-backed revisions. They argue revoking nationwide rights for state-chartered issuers would let states “veto” out-of-state redemption rights and hamper competition. The groups also dispute Treasury-based projections of mass deposit migration as economically unrealistic.
Why do bankers want to bar interest on stablecoin deposits?
The American Bankers Association and a coalition of over 50 banking groups warned senators that permitting interest-bearing stablecoins could siphon deposits from insured banks to uninsured crypto platforms. They referenced a Treasury Department report estimating substantial future outflows—figures bankers say justify legislative correction to protect depositors and the banking system.
What data and expert views are cited in the debate?
Bankers cite the Treasury Department analysis projecting large potential migration of funds. Crypto trade groups counter that actual market behavior, current stablecoin adoption rates, and observed yield differentials do not support such extreme outflow projections. Both sides cite state regulatory precedents and congressional intent when discussing nationwide issuer permissions.
Frequently Asked Questions
How could repeal affect consumers and market competition?
A repeal that restricts interest-bearing stablecoins or nationwide issuer permissions would likely reduce options for consumers and concentrate payment rails within legacy banks, potentially raising costs and lowering innovation. Empirical evidence and market data will shape whether such effects materialize.
What is the Treasury Department’s role in this discussion?
The Treasury Department produced analysis referenced by bankers estimating large potential deposit migration to crypto; crypto groups dispute the realism of those projections and cite current market behavior as a counterpoint.
Key Takeaways
- Banking pressure: Banking associations want sections of the GENIUS Act repealed to limit interest-bearing stablecoins and nationwide uninsured issuers.
- Crypto pushback: Major crypto trade groups argue that rollback would harm competition, consumer choice, and innovation.
- Policy hinge: The upcoming digital asset market structure bill is the vehicle where these disputes may be resolved.
Conclusion
Banking associations are actively pressing the Senate to scale back the GENIUS Act’s treatment of stablecoins, while crypto lobbyists are mobilizing to preserve provisions they see as essential for a competitive payments landscape. Watch the market-structure bill closely; the final language will determine whether policy favors legacy institutions or broader stablecoin market participation. COINOTAG will monitor and report updates as the Senate debate progresses.
Author: COINOTAG
Published: 2025-08-20
Updated: 2025-08-20
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