Leading crypto advocates are voicing strong opposition to a recent initiative by Wall Street figures aimed at amending the recently enacted U.S. stablecoin legislation.
In a public statement addressed to the Senate Banking Committee on Tuesday, the Crypto Council for Innovation (CCI) and the Blockchain Association actively cautioned against adopting the proposals put forth by the American Bankers Association (ABA) and various state-level banking organizations.
Reports indicate that influential banking groups within the U.S., spearheaded by the Bank Policy Institute (BPI), are urging Congress to reinforce the GENIUS Act by addressing what they describe as a perceived loophole. This alleged gap could enable stablecoin issuers and their related entities to provide indirect yield payments.
In a formal communication distributed last Tuesday, banking groups expressed concern that overlooking this issue could lead to a significant outflow of funds, potentially reaching $6.6 trillion, from conventional bank deposits. This, in turn, could negatively impact the accessibility of credit for both consumers and businesses.
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Understanding the Stablecoin Yield Concern
Bankers have suggested that while the GENIUS Act prohibits stablecoin creators from directly offering yield, it doesn’t clearly stop exchanges or associated organizations from doing so on their behalf. This, they contend, creates an unfair advantage for stablecoins by attracting users with returns comparable to savings accounts but without the regulatory burdens faced by banks.
The crypto advocacy groups refute this claim, asserting that the banking sector is attempting to revisit issues that have been thoroughly discussed and resolved during prior negotiations. They cautioned that these modifications would create an uneven playing field that favors traditional banks and hinders both innovation and consumer choice.
“Payment stablecoins differ from bank deposits, money market funds, and investment products, necessitating distinct regulatory approaches,” the crypto advocates declared. “Unlike bank deposits, payment stablecoins are not utilized to provide loans.”
The advocacy letter emphasized Section 16(d) of the existing law, which permits subsidiaries of state-chartered institutions to engage in stablecoin activities across state lines without securing additional licenses.
Although banking groups seek the repeal of this specific clause, the CCI and the Blockchain Association argued that removing it would result in the re-establishment of “the same fragmented, divided regulatory structure that impedes commerce across state borders.”
They also challenged assertions that stablecoins that generate yield could deplete deposits within local community banks. They referenced a July 2025 analysis conducted by Charles River Associates, which revealed no substantial correlation between stablecoin growth and bank deposit reductions.
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Yield-Bearing Stablecoins Surpass $800 Million in Distributions
StableWatch recently reported that yield-generating stablecoins have paid out over $800 million in aggregate returns to holders. Ethena Staked USDe (sUSDe) topped the payout charts over the past month, with $30.71 million, followed by Securitize’s BUIDL ($8.39 million) and Sky Ecosystem’s staked USDe (sUSDe) ($6.78 million).
The cumulative market capitalization of stablecoins currently stands at $288 billion, representing only a small portion of the U.S. dollar money supply, which the Federal Reserve indicated was $22 trillion at the close of June.
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