Are Banks Trying to Kill Stablecoin Rewards? 125 Crypto Groups Push Back Against the Old Guard

Traditional finance draws a line in the sand—and 125 crypto organizations just crossed it.

The Battle for Digital Yield

Forget quiet backroom deals. This is a public, coordinated pushback against regulatory efforts seen as protecting legacy banking margins. The coalition argues that stifling stablecoin innovation doesn't protect consumers—it just protects outdated business models. It's a direct challenge to the notion that only banks should control the rails of digital value.

Rewards Under Fire

The core dispute centers on programmatic yield. Crypto advocates see it as a fundamental feature of a dynamic financial system; some bank-aligned regulators view it as a risky loophole. The push from 125 groups signals this isn't a niche concern—it's an industry-wide red line. They're framing access to stablecoin rewards as a matter of financial inclusion and technological progress, not just a technical feature.

A Clash of Philosophies

At its heart, this is a power struggle over who gets to define money's future. The crypto coalition's move is a strategic play to shape policy before it hardens, using sheer numbers to demonstrate broad opposition. It turns a regulatory discussion into a public debate over competition and choice. After all, nothing threatens a legacy institution like a better product that bypasses its fees—except maybe 125 groups telling regulators exactly that.

The old guard wants to manage risk by limiting innovation. The new guard is betting that innovation itself is the best risk management. One side has the rulebooks; the other has the developers and a growing army of users. Place your bets.

A new policy fight is taking shape in Washington.

More than, led by the, have urged theto reject efforts that WOULD expand restrictions on stablecoin rewards under the. The group warns that broadening the rules would hurt consumers, slow innovation, and give traditional banks an unfair edge.

The letter was sent this week toand, pushing back against proposals that seek to reinterpret the law’s ban on stablecoin “interest or yield.”

What the GENIUS Act Allows and What It Doesn’t

The GENIUS Act clearly prohibitsfrom paying interest to token holders. But according to the coalition, Congress intentionally allowedto offer lawful rewards and incentives.

“That distinction was not accidental,” the letter states, arguing that expanding the ban would “reopen a settled issue” and disrupt a carefully negotiated compromise.

Crypto groups say this is a fundamental change to how stablecoins can compete in payments.

Banks Warn of Deposit Risk – Crypto Pushes Back

Banking groups have argued that stablecoin rewards could drain deposits from the banking system and hurt lending, especially at community banks. Some estimates have projected potential deposit outflows of up to.

The coalition disputes those claims, pointing to athat found.

They also note that banks currently hold aboutearning interest at the Federal Reserve, raising questions about whether deposit constraints are the real issue.

“Opposition to stablecoin rewards reflects protection of incumbent revenue models, not safety-and-soundness concerns,” the letter says.

3/ Efforts to restrict stablecoin rewards in the midst of productive bipartisan collaboration on market structure legislation would reopen a settled compromise, inject uncertainty into regulatory implementation, and undermine confidence in newly enacted financial legislation.

Why Stablecoin Rewards Matter Now

With average checking account yields nearand savings accounts around, the coalition argues that stablecoin rewards help platforms share value directly with users, especially in a higher-rate environment.

The group also warned that reopening the issue before GENIUS rules are even written could undermine confidence in crypto regulation.

“When Congress passes a bill, and it gets signed into law, if you can reopen it right away, you’ve got a question about how much certainty is that really bringing to the market,” said.

This is an important fight for the industry. Stay tuned to Coinpedia for what’s next