Cryptocurrency companies are pushing Congress to let stablecoin issuers share interest earned with users. This is a last-minute attempt to influence upcoming legislation.
The Interest Debate
Stablecoins, digital currencies pegged to the US dollar, are usually backed by real-world assets. Issuers invest these reserves, earning interest. They want to pass this interest on to stablecoin holders, similar to how banks pay interest on savings accounts.
Coinbase CEO Brian Armstrong argues that current securities laws unfairly prevent this. He believes stablecoins should be able to pay interest without extra regulations and taxes.
Competing Legislation and Opposition
Two bills are currently making their way through Congress: the GENIUS Act and the STABLE Act. The STABLE Act explicitly prohibits stablecoin interest payments, while the GENIUS Act is less clear on the issue.
While some lawmakers are open to allowing interest payments, traditional banks are strongly against it. The American Bankers Association worries that this could cause people to move their money from bank accounts to stablecoin wallets, threatening the banking system. They see it as a significant risk to their role in lending and credit.
