The Blockchain Association, a non-profit organization advocating for crypto, sent a letter to the US Senate Committee on Banking, signed by over 125 groups and companies in the crypto industry, opposing the ban on third-party service providers and platforms that offer customer rewards to stablecoin holders.
Expanding the ban on stablecoin issuers sharing yield directly with customers, as outlined in the GENIUS stablecoin regulatory framework, to include third-party service providers hinders innovation and results in “greater market concentration,” the letter stated.
The letter likened the rewards offered by crypto platforms to those provided by banks, credit card companies, and other traditional payment providers.
The Blockchain Association argued that preventing crypto platforms from offering similar rewards for stablecoins bestows an unfair advantage to established financial service providers.
“The potential benefits of payment stablecoins will not be realized if these types of payments cannot compete on an equal footing with other payment mechanisms. Rewards and incentives are a standard feature of competitive markets.”
The Blockchain Association has made multiple statements and letters opposing the prohibition of crypto platforms sharing yield-bearing opportunities with customers, contending that these rewards aid consumers in combating inflation.
Related: Bank of Canada lays out criteria for ‘good money’ stablecoins
FDIC clears the way for banks to issue stablecoins; industry group claims stables aren’t a threat
The Federal Deposit Insurance Corporation (FDIC), the US regulatory body overseeing and insuring the banking sector, released a proposal on Tuesday allowing banks to issue stablecoins through subsidiaries.
According to the proposal, both the bank and its stablecoin subsidiary would be subject to FDIC regulations and evaluations for financial stability, including reserve requirements.
The Blockchain Association continues to contest claims that yield-bearing stablecoins and offering rewards to customers pose a threat to the banking sector and its lending practices.
“Evidence does not support assertions that stablecoin rewards endanger community banks or lending capabilities,” the Blockchain Association noted, emphasizing that it is challenging to argue that bank lending is actually limited by customer deposits.
Nonetheless, the banking industry has lobbied against yield-bearing stablecoins and crypto platforms providing yield to clients due to concerns that interest offered on digital asset products will diminish banks’ market share.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom
