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Crypto Industry Fights Back Against Banking Lobby’s Push to Weaken New Stablecoin Law
The cryptocurrency world is witnessing a heated battle as leading advocacy groups push back against attempts by traditional banking institutions to modify the recently enacted GENIUS Act. This legislative showdown could determine the future landscape of digital finance in America.
Banking Giants Want Changes, Crypto Says No
In a strongly worded letter delivered to Senate Banking Committee leadership Tuesday night, the Blockchain Association and Crypto Council for Innovation firmly rejected demands from banking industry heavyweights. Their message was crystal clear: hands off the new stablecoin legislation.
The controversy stems from last week’s coordinated effort by the American Bankers Association (ABA) alongside 52 banking organizations who called for significant modifications to the Guiding and Establishing National Innovation for U.S. Stablecoins Act. President Donald Trump signed this groundbreaking legislation into law just last month.
Interest Payment Battle Heats Up
The banking lobby’s primary concern centers around what they perceive as weak restrictions on stablecoin issuers paying interest to holders. While supporting these limitations in principle, banking groups argue the current framework contains loopholes that exchanges, brokers, and affiliates can exploit.
Their fear? Stablecoins could transform from simple payment tools into store-of-value mechanisms and credit instruments, fundamentally disrupting traditional banking models. The Bank Policy Institute has echoed these concerns, warning about potential deposit liquidity and credit risks.
Crypto Advocates: It’s About Consumer Choice
However, crypto organizations see this banking pushback as protectionist maneuvering. They argue proposed changes would unfairly cement traditional financial institutions’ market dominance while limiting consumer options.
“Eliminating these features for stablecoin users, while allowing them in the banking sector, would tilt the playing field in favor of legacy institutions,” the crypto groups stated, particularly highlighting concerns about underbanked consumers who increasingly depend on digital wallets.
The stakes couldn’t be higher as both sides prepare for what promises to be an intense regulatory battle over America’s digital financial future.
