The new GENIUS Act, the first US law on stablecoins, has everyone talking. But some big banking groups aren’t happy. They think it has some serious problems that could hurt the financial system.
Loopholes and Risks
In a letter to the Senate, these groups – representing banks across the country – said the law needs fixing fast. They want a clearer, stronger set of rules for digital money. They say the decisions made now will shape our financial system for years to come.
One big issue is interest payments. The law says stablecoin companies can’t offer interest, but the banks say this is easily bypassed. Exchanges or partners could just give rewards to people holding stablecoins. This, they argue, messes with the market and takes money away from traditional banks. To fix this, they want the ban on interest to apply to exchanges and other related businesses.
Weakening State Control?
Another problem is Section 16(d). This lets certain banks operate in states without that state’s permission. The banking groups say this weakens the system of checks and balances between states, putting financial safety at risk. They want this section removed to keep state oversight strong.
They also want to close loopholes that let non-banking companies issue stablecoins. They say keeping banks and other businesses separate has always been important for protecting the US financial system. The GENIUS Act tries to stop non-banks from issuing stablecoins, but it has exceptions. The banking groups say these exceptions could lead to unfair advantages and make regulation even harder.