The US Treasury faces conflicting demands from crypto firms and traditional banks regarding stablecoin interest payments under the GENIUS Act. Coinbase argues for limited restrictions while banking groups push for a comprehensive ban. This regulatory battle highlights the ongoing tension between innovation and traditional financial oversight.
about Coinbase, Banks Clash Over Stablecoin Interest RulesBank Policy Institute
0 in Finance and 0 in Crypto last weekBanks Fight Coinbase’s Bid for Federal Trust Charter
Major banking associations are intensifying their opposition to Coinbase’s application for a national trust bank charter, revealing deep tensions between traditional financial institutions and cryptocurrency firms seeking regulated status. The Independent Community Bankers of America and Bank Policy Institute have formally urged the Office of the Comptroller of the Currency to block Coinbase’s bid, citing systemic risks and legal concerns. Coinbase Chief Legal Officer Paul Grewal has countered that banks are engaging in protectionism disguised as consumer protection, preferring crypto remain unregulated to avoid competition.
about Banks Fight Coinbase's Bid for Federal Trust CharterLummis Urges CFPB to Finalize Open Banking Rule for Crypto
U.S. Senator Cynthia Lummis is intensifying pressure on the Consumer Financial Protection Bureau to finalize its open banking rule, warning that major financial institutions are weaponizing their gatekeeping power to restrict American access to digital asset platforms. The rule, finalized in October 2024 but now under reconsideration, would enable consumers to securely share financial data with third-party applications through APIs—creating critical infrastructure for connecting traditional bank accounts to crypto exchanges. This regulatory battle pits pro-crypto lawmakers and fintech advocates against banking industry groups who immediately sued to block the rule, creating a legal standoff that could determine the future of financial innovation in the United States.
about Lummis Urges CFPB to Finalize Open Banking Rule for CryptoStablecoin Yield Battle: Banks vs Crypto Over $6.6T Risk
The implementation of the GENIUS Act has sparked a major conflict between traditional banks and the crypto industry over stablecoin yields. While the legislation prohibits stablecoin issuers from paying interest directly, it allows third parties like exchanges to offer yield on stablecoin holdings. Banking groups warn this loophole could trigger up to $6.6 trillion in deposit flight from the U.S. banking system, potentially undermining credit creation and increasing borrowing costs. Crypto industry advocates counter that yield is necessary for stablecoins to compete effectively and that prohibiting it would stifle innovation and put U.S. firms at a global disadvantage. Multiliquid CEO Will Beeson suggests the chance of near-term legislative changes is low due to Washington gridlock.
about Stablecoin Yield Battle: Banks vs Crypto Over $6.6T RiskCrypto Groups Back Brian Quintenz for CFTC Chair
The Crypto Council for Innovation and Blockchain Association have jointly endorsed Brian Quintenz for CFTC Chairman, emphasizing his expertise in digital assets and financial markets. The groups argue his confirmation is crucial for advancing America’s digital asset agenda and implementing regulations that support innovation while maintaining market integrity. Simultaneously, these organizations are opposing banking industry efforts to amend the GENIUS Stablecoin Regulation Act, warning that proposed changes would create an uncompetitive environment favoring traditional banks over broader industry growth and consumer choice. The banking sector has expressed concerns about potential massive deposit outflows to digital assets if current regulatory gaps persist.
about Crypto Groups Back Brian Quintenz for CFTC ChairUS Banks Warn of $6.6T Shift to Stablecoins Over GENIUS Act
A coalition of US banks, spearheaded by the Bank Policy Institute (BPI), has raised alarms over a loophole in the GENIUS Act’s stablecoin bill. While the bill prohibits direct yields from stablecoin issuers, it doesn’t restrict crypto exchanges or affiliates from offering indirect yields—potentially diverting up to $6.6 trillion from banks. The BPI warns this could reduce lending capacity, raise interest rates, and increase borrowing costs. Crypto industry figures, including Coinbase’s leadership, reject the claims, framing them as a bid to stifle competition rather than address systemic risks. The debate highlights tensions between traditional finance and crypto innovation.
about US Banks Warn of $6.6T Shift to Stablecoins Over GENIUS ActBanks Warn of $6.6T Deposit Flight Risk from Stablecoin Loopholes
Banking associations, including the American Bankers Association and the Bank Policy Institute, are demanding Congress address loopholes in the GENIUS Act that permit stablecoin interest payments through third parties. They warn this could trigger a $6.6 trillion deposit exodus from traditional banks, disrupting lending and raising borrowing costs. Despite concerns, crypto firms like Paxos and Circle are leveraging the Act to pursue national banking charters. Experts argue the immediate risk to banks is low, but clearer regulatory guidance is needed to prevent market instability. The banking coalition also seeks to block non-financial firms from issuing stablecoins and repeal provisions allowing state-chartered issuers to operate nationwide without oversight.
about Banks Warn of $6.6T Deposit Flight Risk from Stablecoin LoopholesBanks Urge Stronger Cybersecurity for Financial Regulators
Leading financial trade groups, including the American Bankers Association and the Securities Industry and Financial Markets Association, have expressed deep concerns about cybersecurity vulnerabilities at federal regulatory agencies. In a letter to the US Treasury, they highlighted the OCC’s email breach, where hackers accessed 150,000 emails. The associations urged stricter security standards for regulators, better incident response protocols, and reduced data-sharing demands to mitigate risks from nation-state cyber threats. The breach underscores growing fears over the security of sensitive financial data held by government agencies.
about Banks Urge Stronger Cybersecurity for Financial RegulatorsUS Treasury’s SLR Overhaul Could Boost Bitcoin Markets
The US Treasury is nearing a decision to overhaul the supplementary leverage ratio (SLR), a post-2008 rule requiring banks to hold capital against even risk-free assets like Treasuries. Exempting or reducing this requirement could free up $250 billion in bank capital, compressing Treasury yields and injecting liquidity into markets. Analysts suggest this regulatory shift could act as ‘shadow QE,’ benefiting Bitcoin as investors seek higher-risk assets. Bitcoin’s price has already reacted, with on-chain data showing tightening supply as institutional buyers accumulate. Critics warn that banks may still hesitate to absorb more Treasury debt, potentially forcing the Fed to intervene. Nevertheless, the SLR adjustment is seen as a structural tailwind for Bitcoin amid fiscal constraints and sticky inflation.
about US Treasury's SLR Overhaul Could Boost Bitcoin MarketsBanks Urge SEC to Rescind Cybersecurity Disclosure Rule
Leading U.S. banking associations, including the American Bankers Association, have formally requested the SEC to rescind its cybersecurity incident disclosure rule. In a May 22 letter, the groups contended that the four-day public reporting mandate undermines confidential cybersecurity protocols and national security efforts. The coalition, which also includes SIFMA and the Bank Policy Institute, warns that premature disclosures could alert malicious actors and hinder regulatory coordination. The SEC has yet to respond to the petition, leaving financial firms in limbo over compliance obligations.
about Banks Urge SEC to Rescind Cybersecurity Disclosure RuleUS Plans to Ease Bank Capital Rules Amid Industry Pushback
The US government is reportedly set to relax banking regulations by lowering the supplementary leverage ratio (SLR), a key capital reserve requirement introduced under Basel III after the 2008 financial crisis. Advocates, including Federal Reserve Chair Jerome Powell and banking lobbyists, claim the move will enhance liquidity in the Treasury market and align US standards with global norms. However, critics like Nicolas Véron of the Peterson Institute warn that easing rules now could expose banks to greater risks amid economic uncertainty. The exact new SLR threshold remains undisclosed, but lobbyists aim to bring US requirements closer to the international minimum of 3%. The debate highlights tensions between financial stability and market flexibility.
about US Plans to Ease Bank Capital Rules Amid Industry Pushback