United States community banks jointly act to push for blocking the stablecoin provisions through third-party "indirect interest" regulations in the GENIUS Act

WuSaidBlockchainW · 2026-01-07T02:03:52+00:00

U.S. community banks jointly push to patch the loopholes in the GENIUS Act, emphasizing the need to prohibit stablecoin issuers from providing yield to users through affiliated entities to prevent "indirect interest payments." The measure aims to protect community banks' deposit and lending capabilities and prevent potential deposit outflows of up to $6.6 trillion.

WuSaidBlockchainW

2026-01-07 02:03:52

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U.S. community banks are jointly pushing to block a “loophole” in the “GENIUS Act.” The Community Bankers Council under the American Bankers Association has written to the Senate stating that the ongoing legislation on crypto market structure should explicitly prohibit affiliated parties or partners (such as exchanges) of stablecoin issuers from providing yields/interest to users (yield), to prevent stablecoins from indirectly paying interest through third parties. The group pointed out that although the “GENIUS Act” has banned stablecoin issuers from paying interest directly, some exchanges still offer rewards to stablecoin holders within their platforms, which could weaken community banks’ deposit and lending capabilities. Previously, the Banking Policy Institute also made a similar claim, stating that if the loophole is not fixed, it could trigger a deposit outflow of up to @E5@6.6 trillion. (Cointelegraph)

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