In the wake of the latest passage of the GENIUS Act, a brand new legislation regulating stablecoins, tensions have emerged between conventional banking associations and cryptocurrency advocacy teams.
While the US banking associations representing all fifty states have raised alarms about potential vulnerabilities within the legislation, two crypto organizations, the Blockchain Association and the Crypto Council, have pushed again in opposition to proposed modifications.
Crypto Advocates Warn Against Uncompetitive Environment
In a joint assertion, the Blockchain Association and the Crypto Council expressed their sturdy opposition to the letters issued on August 12, 2025, by the Bank Policy Institute and numerous state bankers associations.
These letters goal to revisit points that they argue have been completely addressed in the course of the legislative means of the GENIUS Act. The teams contend that the proposals threaten to create an uncompetitive setting for stablecoins, prioritizing the pursuits of banks over broader trade progress, competitors, and client alternative.
They argue that cost stablecoins are basically completely different from financial institution deposits or funding merchandise, and subsequently shouldn’t be regulated in the identical manner.
According to the GENIUS Act, stablecoin issuers are required to keep up one-to-one reserves in money or high-quality liquid property and function underneath federal or certified state licensing and supervision.
The crypto teams spotlight that this regulatory framework is designed to make sure that stablecoins don’t operate like conventional financial institution deposits or cash market funds, emphasizing their distinctive function within the monetary ecosystem.
The advocacy teams additionally addressed claims that sure practices, akin to exchanges sharing rewards, undermine the GENIUS Act’s prohibition on issuer-paid curiosity.
They argue {that a} stage enjoying area is crucial, permitting each banks and crypto corporations to innovate and compete, notably for underbanked shoppers who more and more depend on digital wallets.
Stablecoins Under Scrutiny
The letter additional warns that eliminating options obtainable to stablecoin customers, whereas allowing them for banks, would unfairly favor bigger legacy establishments that usually fail to offer aggressive returns.
One contentious level is Section 16(d) of the GENIUS Act, which permits subsidiaries of state-chartered establishments to conduct cash transmission to help lawful stablecoin issuer actions throughout state traces.
The advocacy teams argue that repealing this provision would hinder stablecoin redemption rights for out-of-state holders, doubtlessly making a fragmented regulatory setting that stifles interstate commerce.
Additionally, the decision to ban non-financial firms from issuing cost stablecoins is seen as an excessive measure that might stifle innovation.
In their assertion, the Blockchain Association and the Crypto Council emphasize that stablecoins function underneath strict reserve and supervisory necessities, with their reserves largely remaining inside the conventional monetary system.
They argue that permitting responsibly regulated platforms to share advantages with prospects just isn’t a loophole however moderately a characteristic that enhances monetary inclusion and fosters innovation.
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