A year ago, US banks thought they had won.
The GENIUS Law, signed in July 2025, prohibited stablecoin issuers from paying dividends on their tokens. Banks insisted on providing this. With this, he believed that the competitive threat from digital dollars was addressed.
The law does not say anything about exchange.
How the Difference Became a Problem
Like CoinGecko was announced todaywithin months of GENIUS going, Coinbase was offering around 4% on USDC and Kraken around 5%. Chase was paying 0.01%. The Blockchain Association, which represents 125 companies including Coinbase, Kraken and a16z, later wrote to the Senate arguing that Congress “deliberately preserved” the platform’s ability to issue rewards.
Banks called it a tip. The crypto industry called it the outcome of negotiations.
The Federal Reserve missed it completely. Fed Governor Stephen Miran he spoke in November, a few months after GENIUS passed, saying he saw it “low expectations of money leaving domestic banks” because stablecoins do not provide yield. Productivity programs were already there.
The CEO of Bank of America finally put a number on what was at stake: $ 6 trillion in deposits could leave US banks to sell money. The Fed’s view found that in the case of a major drawdown, the deficit could reach $1.26 trillion.
More than 3,200 bankers signed letters to Congress. The American Bankers Association made closing the gap a priority in their policy.
Terminated Partnership
Congress responded with the CLARITY Act, extending the productivity ban to all providers of digital services. In January, Coinbase withdrew support and the Senate vote was put on hold. The White House stepped in, opening negotiations with a deadline of March 1. That passed without a deal.
On March 20, Senators Tillis and Alsobrooks announced the agreement – productivity is restricted, activity based rewards are allowed. The stock market in the banking sector wins immediately.
Also Read: Tokenization Hearing Confirmed, CLARITY Act Stablecoin Deal Done “In Principle”: Big Crypto Week
This week, Coinbase rejected the listing againtelling the Senate office that it will not agree with the language that prohibits providing “directly or in other ways” with anything “similar in economic terms to bank interest.”
The Government is Pulling Two Sides
The problem, as CoinGecko points out, is that the US government did not agree with the results. Although banks are pushing for restrictions, Treasury Secretary Bessent expects stablecoins to generate $2 trillion in demand for US government bonds. Tether alone already has $130 billion in Treasuries – more than Germany.
Banks need a closed system. Treasury needs stablecoins to grow. Senator Lummis said negotiators want to take action by the end of April.
Now it’s a waiting game.
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