Banks vs. Crypto: The Fight Over Stablecoin Rewards
Stablecoin Rewards in the Crosshairs
Big banks are advocating for changes to the GENIUS Act, aiming to prevent stablecoin issuers from offering rewards through third parties. Crypto leaders argue this move is an attempt to stifle competition.
The Current Loophole
The GENIUS Act already prohibits stablecoin issuers from offering interest. However, major crypto exchanges still provide rewards to holders. Community banks claim this loophole undermines their lending capabilities.
Crypto Industry Pushes Back
Crypto groups counter that there's no evidence stablecoins harm banks. They argue that low-interest bank accounts benefit big banks more than consumers, while stablecoin rewards directly benefit everyday users.
Warnings from Crypto Advocates
- John Deaton, a pro-crypto lawyer, warns that altering the law could drive users toward China's digital yuan, which already offers interest.
- Alexander Grieve from Paradigm agrees, stating that undoing the rewards provision would reverse progress.
- Mike Novogratz, CEO of Galaxy Digital, urges banks to compete rather than seek legal changes, calling the potential reversal "foolish."
The Stakes
The debate highlights the tension between traditional banking and the growing crypto industry, with significant implications for financial competition and consumer choice.
