The Crypto industry mounts a counter -offensive against Wall Street Bankers’ bid to rewrite the new stablecoin legislation of the United States and argue that attempts to roll core regulations back in the guidance and establish national innovation for us stableecoins (Genius) Action would tilt the field against traditional banks.
In a letter to leaders of the Bank Committee’s leaders dated August 19, Crypto Council for Innovation and Blockchain Association called for legislators to reject proposals from the American Bankers Association, Bank Policy Institute and State Bank groups calling for Removing Section 16(d) of the law and prohibited dividend programs offered by affiliated companies by stablecoin issuers.
Section 16(d) Allows subsidiaries of state institutions to implement money transfer across state lines to support stablecoin issuing activities, ensuring that holders can redeem their token’s nationwide without needing separate state licenses.
Banking groups warned earlier this month that allowing state, uninsured institutions to issue stablecoins and operate nationwide would constitute regulatory arbitrage and 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 affiliated businesses or exchanges from doing so, which they say they could drain as much as $ 6.6 trillion in deposits from the US banking system.
Crypto Groups ’19. August -letter rejected this fear as not supported by observed data. With reference to a July 2025 study by Charles River Associates, the groups said there is no statistically significant connection between stableecoin resolution and payment outflows in society.
Instead of pointing out, most stablecoin reserves remain within the financial system of business banks and state papers and continued to support loans.
They also claimed that allowing affiliated companies to share rewards with stablecoin users ensuring a fair competition, especially for underbanked consumers undervalued by traditional banks.
At present, the average US check of account pays only 0.07%APY, far below inflation, while the Federal Reserve’s benchmark interest rate is 4.25%-4.50%.
“Removing these features for stableecoin users while allowing them in the banking sector would tilt the rules of the game in favor of older institutions,” the groups wrote.
Genius Act is law, but the digital asset market clarity law, a wider crypto market framework already adopted by parliament and currently in the Senate, could still reshape stablecoin policy before regulators prepare implementing rules.
Bank people have seized this process to push their agenda while crypto groups lobbying to keep the law intact.
Republican Tim Scott of South Carolina, the Senates Bank President, said this week expects the bill to be completed in late September and believe that as many as 18 Democrats had to vote for it. However, he recognized the possibility of opposition from Senator Elizabeth Warren, a Democrat from Massachusetts and her allies.
Regardless of which version emerges, they must be reconciled with Parliament’s Digital Asset Market Clarity Act and can provide opening bankers who want to revise StableCOin regulations before regulators start writing rules.
