Despite initially being addressed in the GENIUS Act, a stablecoin bill signed into law by President Trump in July, the rewards issue has continued to plague negotiations over the market structure legislation as the crypto and banking industries have launched dueling lobbying efforts.
It now threatens to derail the market structure bill at a key juncture, as the Senate Banking Committee prepares to hold a vote on the legislation Thursday after six months of negotiations.
Blockchain Association CEO Summer Mersinger came out swinging against the banking industry Tuesday, arguing that "[w]hat is threatening progress is not a lack of policymaker engagement, but the relentless pressure campaign by the Big Banks to rewrite this bill to protect their own incumbency."
When Congress passed the GENIUS Act last summer, the rewards issue was barely a blip on the radar. The measure, which sought to create a regulatory framework for the dollar-backed digital tokens, banned stablecoin issuers from paying "any form of interest or yield" to stablecoin holders.
However, as senators turned their attention to legislation attempting to establish regulation for the broader crypto market, the banking industry began pushing for changes to the stablecoin rewards provision within the new bill.
Banking groups argue the GENIUS Act left open a "loophole" that still allows the crypto industry to offer rewards to stablecoin holders through third parties, which could cause significant deposit outflows from banks, particularly community banks, and threaten their lending capabilities.
"Without clear statutory language extending this prohibition in market structure legislation now being advanced, trillions will be displaced from community lending, and the financial fabric of towns and neighborhoods nationwide will be weakened," a group of trade associations, including the American Bankers Association, wrote in a letter to senators Monday.
The crypto industry, in turn, has accused the banks of attempting to "relitigate" issues that were settled in the stablecoin bill, contending that rewards are necessary for stablecoins to effectively compete in the payments space.
Check out the full report at TheHill.com.
No comments:
Post a Comment