Two leading advocacy organizations in the crypto sector are resisting Wall Street bankers’ recent efforts to repeal the newly established stablecoin legislation in the United States.
In a collaborative letter sent to the Senate Banking Committee on Tuesday, the Crypto Council for Innovation (CCI) and the Blockchain Association urged legislators to dismiss the proposals from the American Bankers Association (ABA) and state banking associations.
Reports indicate that multiple US banking organizations, led by the Bank Policy Institute (BPI), are pressing Congress to strengthen the GENIUS Act by eliminating what they refer to as a loophole that could enable stablecoin issuers and their affiliates to indirectly offer yields.
In a letter dispatched last Tuesday, these groups cautioned that neglecting to address this issue could siphon off as much as $6.6 trillion from conventional bank deposits, jeopardizing the credit flow to both households and businesses.
Banking lobby concerning stablecoins yield loophole. Source: Bank Policy Institute
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Stablecoin yield loophole
The bankers contended that although the GENIUS Act prohibits stablecoin issuers from offering yields, it does not clearly disallow exchanges or affiliates from doing so on their behalf. They argue this could provide stablecoins with a competitive advantage by attracting users with returns akin to those of savings accounts, without adhering to the equivalent banking regulations.
The crypto organizations accused the banking lobby of attempting to revisit issues already resolved during months of discussions, warning that the suggested changes would skew the landscape in favor of traditional banks while hindering innovation and consumer options.
“Payment stablecoins are neither bank deposits, nor money market funds, nor investment products, and hence they are not regulated similarly,” stated the crypto advocacy organizations. “Unlike bank deposits, payment stablecoins do not serve to fund loans,” they further noted.
The letter highlighted Section 16(d) of the law, which permits subsidiaries of state-chartered institutions to engage in stablecoin activities across state boundaries without needing additional licenses.
Banking organizations are seeking the repeal of this clause, but CCI and the Blockchain Association argued that eliminating it would reinstate “the same fragmented, balkanized regulatory environment that stifles interstate commerce.”
They also countered the claims that yield-bearing stablecoins could deplete deposits from community banks, referencing a July 2025 analysis by Charles River Associates that uncovered no significant correlation between the growth of stablecoins and bank withdrawals.
Related: South Korea prepares stablecoin framework; legislation anticipated in October
Yield stablecoins exceed $800 million in payouts
Yield-bearing stablecoins have provided over $800 million in total returns to their holders thus far, according to a recent update by StableWatch. Over the last 30 days, Ethena Staked USDe (sUSDe) topped payouts with $30.71 million, trailed by Securitize’s BUIDL at $8.39 million and Sky Ecosystem’s staked USDe (sUSDe) with $6.78 million.
Stablecoins yield payout. Source: Stablewatch
The total market capitalization of stablecoins currently stands at $288 billion, a small fraction of the US dollar money supply, which the Federal Reserve reported as $22 trillion at the conclusion of June.
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