Crypto Coalition Challenges Proposed Stablecoin Restrictions in Washington

A coalition of 125 cryptocurrency groups is pushing back against efforts to expand restrictions on stablecoin rewards, warning that such measures would stifle innovation and unfairly advantage traditional banks. The groups argue that Congress intentionally allowed stablecoin issuers to offer lawful rewards, a distinction they claim was deliberate and should not be overturned.

Banking groups have raised concerns that stablecoin rewards could lead to significant deposit outflows, potentially impacting lending, particularly at community banks. However, the crypto coalition disputes these claims, pointing to existing bank holdings that earn interest at the Federal Reserve as evidence that deposit constraints may not be the primary issue.

The debate centers on the interpretation of the GENIUS Act, which prohibits certain entities from paying interest to token holders but permits rewards and incentives. The crypto groups contend that broadening the ban WOULD disrupt a carefully negotiated compromise and harm consumers.