- Over 125 crypto firms urged senators to resist reopening stablecoin reward rules already set in law.
- Industry leaders argue the GENIUS Act clearly limits issuers while allowing third-party rewards.
- Banks warn rewards could shift deposits, while data cited by crypto groups disputes that claim.
- Senate negotiations continue, with lawmakers seeking balance between banking stability and innovation.
Stablecoin rewards have emerged as a key flashpoint in Washington as crypto firms press lawmakers to preserve the current legal framework.
More than 125 digital asset companies and trade groups have urged the Senate Banking Committee to reject proposals that would tighten limits under existing law.
The debate centers on whether Congress should revisit provisions of the GENIUS Act so soon after enactment.
Lawmakers are weighing calls for regulatory certainty against banking sector concerns as market structure talks advance.
Industry Warns Against Reopening Settled Law
Stablecoin rewards drew firm opposition from crypto groups in a letter led by the Blockchain Association.
The signatories argued that attempts to reinterpret the GENIUS Act’s interest ban would erode confidence in congressional action.
They stressed that Congress already settled the issue during negotiations. Revisiting it now, they said, would inject uncertainty into a market seeking clear rules.
Blockchain Association CEO Summer Mersinger reinforced this view in comments to The Hill. “The idea that we reopen [the issue] before we even start rulemaking just doesn’t make any sense,” she said.
She added that rapid reconsideration of enacted laws weakens trust. “When Congress passes a bill, and it gets signed into law, if you can reopen it right away, you’ve got a question about how much certainty is that really bringing to the market,” Mersinger stated.
Industry leaders also used social media to amplify these points. In coordinated posts on X, several trade groups described the proposed expansion as inconsistent with legislative intent.
The messages emphasized that Congress deliberately restricted issuers while allowing other entities flexibility. These posts circulated widely as senators continued closed-door negotiations.
Banks Cite Deposit Risks as Senate Talks Continue
Banking groups have maintained that stablecoin rewards offered by third parties threaten traditional deposits.
They argue that rewards could encourage consumers to move funds away from banks. Industry representatives labeled this structure a loophole that conflicts with congressional goals.
Community banks have warned that deposit shifts could constrain local lending.
Crypto groups challenged these claims by pointing to economic data. Their letter cited an analysis from Charles River Associates, finding no significant relationship between stablecoin use and community bank deposits.
They also questioned deposit shortage arguments by referencing Federal Reserve figures. According to the letter, roughly $2.9 trillion sits in reserve balances earning interest rather than supporting loans.
“Opposition to stablecoin rewards reflects protection of incumbent revenue models, not safety and soundness concerns,” the letter stated.
This language underscored frustration within the crypto sector over renewed restrictions. Senate negotiations remain ongoing, with Chair Tim Scott signaling an early 2026 markup.
A recent Democratic proposal acknowledged banking worries, noting that lawmakers believe solutions can protect banks while still permitting rewards and incentives.