WASHINGTON–The nation’s crypto industry is pushing back on any attempts to rewrite or amend portions of the just-passed Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act that it believes would tilt the field toward mainstream banks.
As the CU Daily reported here, some members of Congress are calling for amendments be made in the GENIUS Act, saying they have concerns over the balance of power between state and federal regulators and other issues.
But in a letter to Senate Banking Committee, the Crypto Council for Innovation and the Blockchain Association are calling on lawmakers to reject proposals various financial institution trade association that would strip out Section 16(d) of the law and ban yield programs offered by affiliates of stablecoin issuers.
As Coindesk explained, Section 16(d) allows subsidiaries of state-chartered institutions to conduct money transmission across state lines in support of stablecoin issuer activities, ensuring holders can redeem their tokens nationwide without needing separate state licenses.
Bank Groups Warning
Banking groups warned earlier this month that allowing state-chartered, uninsured institutions to issue stablecoins and operate nationwide would amount to regulatory arbitrage, bypassing state licensing regimes, CoinDesk reported earlier.
“They also argued that the law contains a loophole by banning issuers themselves from offering interest but not preventing affiliates or exchanges from doing so, which they say could drain as much as $6.6 trillion in deposits from the U.S. banking system,” Coindesk added.
‘Unsupported’ Claims
But the crypto groups in their letter argued such fears are unsupported by observed data, and pointed to a July 2025 study by Charles River Associates that they said found no statistically significant link between stablecoin adoption and community bank deposit outflows.
Instead, the letter argues, most stablecoin reserves remain inside the financial system in commercial banks and Treasury securities, continuing to support lending.
Sharing of Rewards
The letter also calls for allowing affiliates to share rewards with stablecoin users ensures fair competition, especially for underbanked consumers who are underserved by traditional banks, Coindesk reported.
“Eliminating these features for stablecoin users, while allowing them in the banking sector, would tilt the playing field in favor of legacy institutions,” the groups stated.
