Stablecoins: Banks and Crypto Lobbyists Clash Over Rules
A heated debate is unfolding between banks and crypto advocates over the future of stablecoin regulations. The banking sector is pushing for changes, while crypto lobbyists are firmly opposed.
Bankers Push for Changes
Last week, a group of bankers made a strong case to senators. They want to modify or even remove parts of a new law that governs stablecoins. This law, known as the GENIUS Act, was recently signed into law and sets rules for issuing and trading stablecoins.
The bankers are worried about a big shift in money. They believe that up to $6.6 trillion could move from insured bank accounts to uninsured stablecoin accounts. To prevent this, they want to limit stablecoin laws through an upcoming bill on digital asset market structure.
Crypto Lobbyists Push Back
Crypto lobbyists, however, see things differently. They argue that the bankers' requests would create an unfair environment. They believe it would protect banks at the expense of innovation, competition, and consumer choice.
In a letter to the Senate Banking Committee, two major crypto lobbying groups pushed back. They said the bankers' claims about money shifting to stablecoins are not realistic. They also defended the rights of crypto exchanges to offer interest on stablecoin deposits.
The crypto groups also highlighted that without the GENIUS Act's provision, states could block out-of-state stablecoin holders from redeeming their coins. They argued that this would be a significant setback for the stablecoin industry.
Uncertain Outcome
The outcome of this debate is still uncertain. The GENIUS Act's language was negotiated and approved by both chambers of Congress months ago. It remains to be seen whether the bankers' requests will gain traction.
Earlier this month, a Senate staffer involved in the legislation stated that the GENIUS Act was designed to regulate stablecoin issuers, not how stablecoins should be regulated on secondary markets. This statement adds another layer to the ongoing debate.