US Banks Push for Stablecoin Yield Loophole Closure in GENIUS Act
US banking groups are urging Congress to amend the GENIUS Act, citing a critical loophole that allows stablecoin issuers to offer yields through affiliate companies. The Bank Policy Institute (BPI) and others warn this could destabilize traditional banking by diverting up to $6.6 trillion in deposits.
While the 2025 law prohibits direct yield-bearing stablecoins, issuers may circumvent restrictions via partnerships with crypto exchanges. The $280 billion stablecoin market—though still nascent—poses systemic risks if yields continue attracting capital away from banks.
Regulators face mounting pressure to address this regulatory arbitrage. The debate underscores growing tensions between decentralized finance innovations and legacy financial safeguards.
