Recent developments in US cryptocurrency regulation have created a new tension between banks and politicians, especially regarding stablecoin returns. US President Donald Trump claimed that the GENIUS Act, which he signed last year, was threatened by banks and called on Congress to pass regulations determining the market structure. Trump’s statements on social media further escalated the conflict between the banking sector and the crypto industry.
Dispute Over Stablecoin Yields Deepens
At the heart of this debate is the GENIUS Act’s ban on direct interest payments by stablecoin issuers. However, the current regulation leaves the door open for exchanges such as Coinbase and Kraken, which are third-party platforms, to transfer the resulting returns to users. Bank Policy Institute, one of the largest banking lobbies, argues that this practice is a legal loophole. According to analysis, this structure poses a risk of trillions of dollars of deposit outflow from banks. Bank of America CEO Brian Moynihan also stated that stablecoin-based interest products could attract a significant portion of commercial bank deposits to other platforms.
Different Approaches Between Banks and Crypto Platforms
The banking industry is focused on the CLARITY Act, which is currently being discussed in the Senate, to close the existing legal loophole. The bill is set to share the structure and supervision of the crypto market between the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). However, the debate over stablecoin yields is disrupting this process. JPMorgan Chase CEO Jamie Dimon stated that platforms offering interest-like payments should be regulated like banks. Dimon said rewards based on transactions are permissible, but he opposes interest-like payments on the balance. He stated that the capital requirements, FDIC insurance and other regulatory obligations that banks must meet should also apply to crypto companies.
On the other hand, Coinbase CEO Brian Armstrong opposes this approach of banks. Armstrong suggests that traditional financial institutions will also turn to stablecoin interest payments due to the competitive pressure of digital assets. More than 125 companies operating in the crypto space also launched a coordinated campaign last year, sharing the view that reopening the current regulation would disrupt market stability.
Time is Running Out in the Critical Legal Process
The White House had targeted the beginning of March to reach a compromise between the parties, but the process remains stalled. The CLARITY Act is currently pending in the Senate Banking Committee and no official date has yet been set. OCC, one of the regulatory bodies, published a new 376-page proposal on the GENIUS Act last week, bringing forward additional restrictions on the return distribution of stablecoin issuers. Senator Cynthia Lummis also supported Trump’s statements and called for legal steps to be taken quickly.
The legal calendar is rapidly shrinking due to the 2026 midterm elections and the upcoming summer break. If a compromise is not reached soon, the United States may face the risk of losing global competitiveness in cryptocurrency regulations.
