Industry Clash Escalates in Washington

Cryptocurrency advocacy groups launched a counteroffensive against traditional banking associations this Tuesday, accusing them of attempting to manipulate newly passed stablecoin legislation. The Crypto Council for Innovation (CCI) and Blockchain Association jointly submitted a letter to the Senate Banking Committee, urging lawmakers to reject proposed modifications to the recently enacted GENIUS Act.

Banking Sector's $6.6T Warning

This confrontation follows last week's move by banking groups led by the Bank Policy Institute, who warned Congress about a potential regulatory gap. The banks claim the current legislation contains a loophole that might allow stablecoin issuers and their affiliates to indirectly offer yield payments — a practice they argue could drain 【$6.6 trillion】 from traditional bank deposits. They maintain this capital flight would severely impact credit availability for both households and businesses across the nation.

The Yield Mechanism Controversy

Banking representatives argue that while the GENIUS Act explicitly prohibits stablecoin issuers from providing yields, it doesn't prevent third-party exchanges or affiliated entities from offering returns on their behalf. This creates an unlevel playing field where stablecoins could offer savings-account-like returns without adhering to strict banking regulations — potentially giving them an unfair competitive advantage.

Crypto Groups Push Back

In their response, crypto advocacy organizations accused bankers of rehashing settled debates. They emphasized that payment stablecoins fundamentally differ from bank deposits, noting "unlike bank deposits, payment stablecoins are not used to fund loans." The groups particularly defended Section 16(d) of the current law, which permits state-chartered institutions' subsidiaries to conduct stablecoin business across state lines without additional licensing requirements.

Interstate Commerce at Stake

——Scrapping this provision would recreate the same fragmented, balkanized regulatory regime that stifles interstate commerce—— the crypto groups warned. They countered banking concerns about deposit drainage by citing a July 2025 Charles River Associates analysis that found no significant correlation between stablecoin growth and bank outflows.

$800M Yield Market Emerges

Meanwhile, yield-bearing stablecoins have already distributed over 【$800 million】 in returns to holders according to StableWatch data. Over the past month, Ethena Staked USDe led payouts with $30.71 million, followed by Securitize’s BUIDL at $8.39 million. This developing market remains relatively small compared to traditional finance, with stablecoins' total $288 billion market cap representing just a fraction of the Federal Reserve's reported $22 trillion US dollar money supply.

Regulatory Balance Challenge

As both sides dig in their positions, lawmakers face the complex task of balancing innovation against financial stability concerns. The outcome of this regulatory struggle could determine whether stablecoins remain primarily payment instruments or evolve into broader financial products — potentially reshaping how Americans store and grow their digital assets in coming years.