Crypto Advocates Push Back Against Banking Lobby’s Stablecoin Proposals

Crypto industry groups are sounding the alarm over banking sector proposals that could reshape stablecoin regulation. The recommendations, they argue, threaten to unravel carefully negotiated compromises and stifle innovation in digital payments.

Payment stablecoins occupy a distinct regulatory category, advocates emphasize. Unlike bank deposits or money market funds, these digital assets aren't used to fund loans. The debate centers on Section 16(d), a provision allowing state-chartered bank subsidiaries to operate stablecoin businesses across state lines without additional licensing - a clause banking groups seek to eliminate.

Industry research counters claims that stablecoin yields might drain deposits from community banks. A July 2025 Charles River Associates analysis found no significant correlation between stablecoin adoption and traditional bank deposit outflows.