US Bankers Warn of Stablecoin Loophole Threatening $6.6 Trillion in Deposits
The American Bankers Association (ABA) Community Bankers Council is lobbying U.S. senators to close regulatory gaps in the GENIUS Act. They warn that crypto companies are circumventing prohibitions on stablecoin interest payments through affiliated exchanges and partners, potentially causing a significant outflow of capital from traditional banks.
Bankers are concerned about preserving the fractional reserve system, which relies on deposits to fund local lending. The ABA argues that loopholes allow "yield-based workarounds" to the interest ban, potentially jeopardizing $6.6 trillion in deposits according to a U.S. Treasury report. The Council demands the interest prohibition extend to all affiliates of stablecoin issuers.
While some regulators and crypto industry figures believe these fears are overstated, the debate highlights friction between DeFi and traditional banking. Future regulations may focus on reserve requirements and activity-based licensing for stablecoin issuers to ensure economic stability.


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US Bankers Warn Stablecoin Yield Loophole Threatens $6.6T in Deposits
The American Bankers Association (ABA) Community Bankers Council has intensified its lobbying efforts, urging U. S....







