125 Crypto and Fintech Groups Oppose Expanded Stablecoin Yield Ban in Senate
A coalition of 125 crypto and fintech groups, led by the Blockchain Association, has sent a letter to Senate Banking Committee leaders opposing any expansion of the GENIUS Act's ban on stablecoin yields. The coalition argues that broader yield restrictions would reduce consumer choice and amount to protectionism rather than consumer protection by barring incentive programs offered at the application layer.
Meanwhile, banks, spearheaded by the American Bankers Association, are urging the Treasury Department to interpret the term "interest or yield" broadly to include merchant discounts and platform rewards. They express concerns about deposit flight from yield-bearing stablecoins.
The coalition challenges these Treasury-declared concerns by citing an analysis from Charles River Associates, showing no disproportionate outflows from community banks between 2019 and 2025. They also highlight that banks hold approximately $2.9 trillion in reserve balances earning interest from the Federal Reserve.
Under the current GENIUS Act, stablecoin issuers are prohibited from paying interest to holders; however, the coalition notes that intermediaries can still offer lawful rewards at the application layer without violating the ban.
Regarding market context, stablecoin circulation is around $310 billion and is projected to increase to about $1 trillion by 2026 as institutions adopt blockchain payments. Notable signatories of the coalition letter include Coinbase, PayPal, Stripe, Ripple, Kraken, Stand With Crypto chapters in 20 states, and investors such as Andreessen Horowitz.
