Leading trade associations on both sides have submitted numerous letters and comments to the Treasury Department and the Office of the Comptroller of the Currency (OCC) in recent days in an effort to influence implementation of a new stablecoin law and the fate of crypto’s push for bank charters.
The crypto industry secured a major victory earlier this year with the passage of the GENIUS Act, which aims to create a regulatory framework for dollar-backed digital tokens known as stablecoins.
However, the measure leaves many details up to the regulators, creating an opening for banks to seek more favorable interpretations of provisions that have concerned the industry.
The American Bankers Association (ABA), Bank Policy Institute (BPI), Independent Community Bankers of America (ICBA) and other banking groups have submitted various letters to the Treasury Department in response to its advance notice of proposed rulemaking on the GENIUS Act.
A key point of contention has been the law’s prohibition on stablecoin interest or yield. Since President Trump signed the stablecoin bill in July, the banking industry has voiced concerns that it leaves open a “loophole” for crypto firms to provide rewards through other means.
After initially appealing to lawmakers, who are currently negotiating additional crypto legislation, the banks have turned their attention to the regulators.
In a letter Tuesday, the ABA and its state counterparts urged the Treasury Department to “broadly interpret” the law’s interest prohibition, arguing it would reflect Congress’ intent that stablecoins “be used for transactions and not as investment vehicles.”
They also recommended the agency bar both direct and indirect payments from stablecoin issuers to prevent companies from getting around the provision through affiliates or partners.
The ICBA similarly argued in a separate letter Tuesday that allowing for such payments “is contrary to and would negate the clear meaning and purpose of the law.”
Beyond their arguments about what lawmakers intended, the banks underscored longstanding concerns about how stablecoins could impact deposits.
They have repeatedly warned that the dollar-backed digital tokens could prompt customers to pull their deposits from banks, resulting in more limited lending capacity, particularly for community banks.
The banking industry’s push to close the interest “loophole,” among other issues it has targeted in the implementation of the GENIUS Act, has riled the crypto industry.
The Blockchain Association has argued that the stablecoin law is “under attack” by banks, who they have accused are attempting to “unravel” the measure in order to protect their own business interests.
In its own response to Treasury on Tuesday, the crypto trade group pushed for a narrower reading of the law. It also urged the agency to clarify that the interest restrictions do not apply to third-party exchanges or platforms.
Check out the full report at TheHill.com tomorrow morning.
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