Banks Join Forces in the US: They Are Trying to Change the Bullish Cryptocurrency Law Signed by Trump

The largest US banking associations have requested amendments to the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS), a bill signed into law by President Donald Trump last month that includes stablecoin regulations.

Banks argue that current regulation contains loopholes that could harm the financial system.

The American Bankers Association (ABA) and 52 banking organizations expressed concerns about the law's interest payment, state regulations, and stablecoin issuance by non-financial companies in a letter sent to the Senate Banking Committee this week.

The banks argued that while they supported the law prohibiting stablecoin issuers from paying interest to investors, the current text allows for this prohibition to be easily circumvented. The letter stated that exchanges, brokers, and affiliates could offer interest-like returns, transforming stablecoins from mere payment instruments into stores of value and credit mechanisms.

“If deposits turn to stablecoins for interest, credit creation will decrease,” the letter stated, adding that the interest ban should also apply to digital asset exchanges, brokers, and other intermediaries.

Banking institutions also noted that this regulatory gap could increase the risk of deposit outflows, especially during crisis periods, which would reduce the supply of credit, raise interest rates, and increase borrowing costs for businesses and households.

*This is not investment advice.