Two major cryptocurrency organizations have accused banks of attempting to distort the issues surrounding the Stubcoin bill recently signed into law by President Trump.
In a letter addressed to leaders of the Senate Banking Committee on Tuesday, the Crypto Council for Innovation (CCI) and the Blockchain Association argued that banks shouldn’t modify the language in the law concerning compensation payments, state authority, and restrictions on non-bank stubcoin issuers.
CCI CEO Ji Hun Kim and Blockchain Association CEO Summer Mersinger wrote, “These topics were thoroughly discussed, negotiated, and compromised during the legislative process.”
They added, “Regrettably, this letter aims to protect banks at the cost of broader industrial growth, competition, consumer options, and undermines the foundations of America’s vibrant financial and innovation landscape.”
Last week, the American Bankers Association and state counterparts urged senators to extend provisions that prohibit interest payments on stubcoins to encompass other digital asset players. They expressed concerns that this provision could be “easily bypassed” when crypto exchanges or affiliates compensate Stablecoin owners.
The Bank Policy Institute (BPI) echoed these sentiments, pushing lawmakers to close “interest loopholes” and arguing that stablecoins shouldn’t be viewed as substitutes for bank deposits or money market funds.
BPI noted, “These distinctions are why payment-stabilized coins should not offer yields like money market funds.” They referenced a Treasury report from early this year indicating that bank deposits could reach $6.6 trillion.
The cryptocurrency group challenged these claims, citing a recent analysis that indicated Stablecoin adoption had no significant negative impact. They asserted that the ability to offer compensation would foster a more equitable competitive environment with banks.
Both factions are also contending with provisions in the Genius Act that influence national regulations and limit non-bank entities’ abilities to issue stablecoins.
The banking sector argues it seeks to repeal certain laws that restrict states’ power to prevent non-insured state entities from operating across state lines. Conversely, the cryptocurrency sector believes these are “the safeguards necessary to protect Stablecoin holders,” allowing the redemption of digital tokens across various states.
Another area of conflict involves the existing restrictions of the Genius Act, which permits non-bank financial institutions to issue stubcoins. While public, non-banking firms are barred from participating, private entities can still engage in this space.
Banks consider this a “loophole” that could blur the lines between banking and commercial operations, suggesting that crypto advocates should strike “the right balance” in the legislation.
The push to amend the Genius Act aims to lay the groundwork for a more comprehensive framework for the crypto market structure when lawmakers return from their August recess.
In July, the House passed a version of the Market Structure Bill, which directly addresses the digital asset market and includes changes to the Stablecoin Act. However, it appears the Senate is pursuing its own legislative path after Republican lawmakers released a draft for debate last month.
