U.S. community banks are urging lawmakers to close a perceived “loophole” in the GENIUS Act that allows crypto exchanges to offer yield on stablecoins, arguing it creates unfair competition with traditional banks and could accelerate deposit outflows.U.S. community banks are urging lawmakers to close a perceived “loophole” in the GENIUS Act that allows crypto exchanges to offer yield on stablecoins, arguing it creates unfair competition with traditional banks and could accelerate deposit outflows.
U.S. Community Banks Push to Close GENIUS Act Stablecoin “Yield Loophole”
News Brief
U.S. community banks are urging lawmakers to close a perceived “loophole” in the GENIUS Act that allows crypto exchanges to offer yield on stablecoins, arguing it creates unfair competition with traditional banks and could accelerate deposit outflows.
Summary
U.S. community banks are urging lawmakers to close a perceived “loophole” in the GENIUS Act that allows crypto exchanges to offer yield on stablecoins, arguing it creates unfair competition with traditional banks and could accelerate deposit outflows.
What Banks Are Objecting To
- Stablecoin yield products offered by exchanges
- Ability to provide interest‑like returns without being banks
- Potential for consumers to treat yield‑bearing stablecoins as deposit substitutes
Banks argue this activity looks economically similar to deposits but operates outside the full banking regulatory framework.
Why This Matters
- Competitive pressure: Yield‑bearing stablecoins can attract funds away from community banks
- Regulatory boundary debate: Where to draw the line between payments, securities, and banking
- Policy precedent: How this issue is resolved could shape the future of on‑chain finance in the U.S.
At stake is whether stablecoin issuers and exchanges can compete on yield without bank charters.
The Counterargument
Crypto advocates contend that:
- Stablecoin yields often come from market activity or reserves, not lending deposits
- Users are not guaranteed principal the same way bank deposits are
- Innovation should not be constrained to protect incumbents
They argue consumer disclosure—not prohibition—is the right approach.
Broader Implications
- Could influence final GENIUS Act language
- May determine whether stablecoins evolve into cash‑like instruments or yield‑bearing financial products
- Signals rising tension as crypto competes directly with traditional banking services
Bottom Line
Community banks’ push to close the GENIUS Act’s stablecoin yield “loophole” highlights a core conflict: stablecoins are starting to compete with bank deposits. How lawmakers respond will shape whether yield remains a feature of U.S.‑regulated stablecoins—or is pushed back into the traditional banking system.
Market Opportunity
Union Price(U)
$0.001168
$0.001168$0.001168
USD
Union (U) Live Price Chart
Disclaimer: The articles published on this page are written by independent contributors and do not necessarily reflect the official views of MEXC. All content is intended for informational and educational purposes only and is not responsible for any actions taken based on the information provided. The content does not constitute financial, legal, or other professional advice, nor should it be considered a recommendation or endorsement by MEXC. Cryptocurrency markets are highly volatile — please conduct your own research and consult a licensed financial advisor before making any investment decisions.
You May Also Like
Shocking OpenVPP Partnership Claim Draws Urgent Scrutiny
The post Shocking OpenVPP Partnership Claim Draws Urgent Scrutiny appeared on BitcoinEthereumNews.com. The cryptocurrency world is buzzing with a recent controversy surrounding a bold OpenVPP partnership claim. This week, OpenVPP (OVPP) announced what it presented as a significant collaboration with the U.S. government in the innovative field of energy tokenization. However, this claim quickly drew the sharp eye of on-chain analyst ZachXBT, who highlighted a swift and official rebuttal that has sent ripples through the digital asset community. What Sparked the OpenVPP Partnership Claim Controversy? The core of the issue revolves around OpenVPP’s assertion of a U.S. government partnership. This kind of collaboration would typically be a monumental endorsement for any private cryptocurrency project, especially given the current regulatory climate. Such a partnership could signify a new era of mainstream adoption and legitimacy for energy tokenization initiatives. OpenVPP initially claimed cooperation with the U.S. government. This alleged partnership was said to be in the domain of energy tokenization. The announcement generated considerable interest and discussion online. ZachXBT, known for his diligent on-chain investigations, was quick to flag the development. He brought attention to the fact that U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce had directly addressed the OpenVPP partnership claim. Her response, delivered within hours, was unequivocal and starkly contradicted OpenVPP’s narrative. How Did Regulatory Authorities Respond to the OpenVPP Partnership Claim? Commissioner Hester Peirce’s statement was a crucial turning point in this unfolding story. She clearly stated that the SEC, as an agency, does not engage in partnerships with private cryptocurrency projects. This response effectively dismantled the credibility of OpenVPP’s initial announcement regarding their supposed government collaboration. Peirce’s swift clarification underscores a fundamental principle of regulatory bodies: maintaining impartiality and avoiding endorsements of private entities. Her statement serves as a vital reminder to the crypto community about the official stance of government agencies concerning private ventures. Moreover, ZachXBT’s analysis…
Share
BitcoinEthereumNews2025/09/18 02:13
MAXI DOGE Holders Diversify into $GGs for Fast-Growth 2025 Crypto Presale Opportunities
Presale crypto tokens have become some of the most active areas in Web3, offering early access to projects that blend culture, finance, and technology. Investors are constantly searching for the best crypto presale to buy right now, comparing new token presales across different niches. MAXI DOGE has gained attention for its meme-driven energy, but early [...] The post MAXI DOGE Holders Diversify into $GGs for Fast-Growth 2025 Crypto Presale Opportunities appeared first on Blockonomi.
Share
Blockonomi2025/09/18 00:00
DeAgentAI releases new white paper, detailing $AIA token economics and staking model
PANews reported on September 18 that the Sui ecological AI project DeAgentAI announced that it has updated its official white paper to version V2. The new white paper primarily adds "token economics" and "staking mechanisms." The token economics section details $AIA's core functions, value capture model, token distribution ratio, and detailed release rules. The staking mechanism section explains $AIA's value and how to stake it. In addition, the white paper also published security audit reports issued by multiple institutions on core components such as token contracts and cross-chain bridges.
Share
PANews2025/09/18 12:05