The Great Stablecoin Showdown: Big Banks Battle Crypto Titans for Regulatory Control

The fight for the soul of digital dollars just went nuclear. Traditional finance giants and crypto-native firms are locked in a bare-knuckle brawl over who gets to write the rules for the next generation of money.

Legacy Titans Dig In

Major banks aren't just asking for a seat at the table—they're trying to build the table, bolt it to the floor, and charge rent. Their playbook? Push for legislation that ties stablecoin issuance to traditional banking charters, effectively building a regulatory moat only they can cross. It's the same old play: use compliance as a competitive weapon.

Crypto's Counter-Punch

The industry's response is pure defiance. Decentralized protocols and crypto exchanges argue that legacy frameworks are obsolete—like regulating the internet with telegraph laws. They're pushing for new, purpose-built regulatory sandboxes that recognize programmability and transparency as features, not bugs. Their mantra: innovation shouldn't require a century-old banking license.

The Stakes: A Multi-Trillion Dollar Future

This isn't academic. The winner gets to define how value moves globally. Will it be through permissioned, bank-controlled rails with their customary fees and delays? Or through open, interoperable protocols that settle in seconds for pennies? The regulatory blueprint decided now will shape commerce for decades.

A cynical take? Watch the 'public safety' arguments closely. Often, it's just rent-seeking in a moralistic disguise. The real fight is over who collects the tolls on the digital financial highway.

The final legislation will be a tell. Does it protect incumbents or empower permissionless innovation? One thing's certain: the side that controls the rules controls the future. And neither side is backing down.

Are Big Banks Disrupting Stablecoin Competition?

Summer Mersinger, CEO of the Blockchain Association and a prominent advocate for the crypto industry in Congress negotiations, took to social media platform X (formerly Twitter) to highlight the current state of discussions following the bipartisan passage of the GENIUS Act. 

She claimed that the “Big Bank lobby” is pushing Congress to revisit settled legislation concerning stablecoin rewards, not due to emerging risks but rather to suppress competition that benefits consumers. 

Mersinger stated, “When Big Banks face competition, they don’t improve services. They lobby to handicap alternatives. And the consumer suffers.”

The firm’s CEO pointed out that the average American savings account currently yields only 0.39%, while checking accounts offer an even lower rate of 0.07%. In contrast, the Federal Funds rate hovers between 3.50% and 3.75%. 

She argued that this discrepancy is not merely a product of market forces but stems from a substantial barrier that the major banks have constructed, preventing customers from accessing better returns. 

Mersinger emphasized that the dominance of the six largest US banks, which control assets equivalent to 60% of the country’s Gross Domestic Product (GDP), only reinforces this trend. 

She further stressed that when new technologies arise that can provide consumers with superior returns, the banks’ immediate response is to invoke claims of “systemic risk” while lobbying against these advancements.

Ultimately, Mersinger and her colleagues are advocating for policies that prioritize consumer options. “We urge Congress to listen,” she implored, signaling the importance of the ongoing debate between the two sectors.

Expert Advocates For Fair Returns 

Market expert Omid Malekan also weighed in, criticizing the notion that stablecoin holders should not earn yields, arguing that the interest revenue generated from taxpayer-backed Treasury bills should be directed to average Americans rather than lining the pockets of bank executives and shareholders. 

Malekan called for a broader discussion on capping credit card interest rates and swipe fees, along with the implementation of a windfall profit tax on the net interest margins of banks. He asserted, “An industry this anti-competition and consumer choice should suffer the consequences.”

Support for Malekan’s view was reinforced by recent earnings reports from major banks. This morning, JPMorgan Chase announced $25 billion in net interest income, illustrating the profits generated by not providing higher returns to savers. Malekan dismissed claims that stablecoins paying interest WOULD harm lending as unfounded.

Featured image from DALL-E, chart from TradingView.com