Interest-Bearing Stablecoins Seen as Threat, US Congress Urged to Strengthen GENIUS Act

VISI.NEWS | BANDUNG - The Bank Policy Institute (BPI), together with several major US banking organizations, is calling on Congress to strengthen the Guaranteed Interest on New Issuance of Stablecoins (GENIUS Act) to prevent stablecoin issuers from offering interest to holders. The coalition includes the American Bankers Association, Consumer Bankers Association, Financial Services Forum, and the Securities Industry and Financial Markets Association. They argue that paying interest on stablecoins could destabilize the financial system by triggering massive capital flows from traditional banks to digital assets offering higher yields. According to BPI, without strict regulation, interest-bearing stablecoins could blur the line between cryptocurrencies and tightly regulated bank deposit products, while increasing the risk of issuer default. This, they warn, could undermine public confidence in the US financial system. “We support innovation, but any product that functions like a bank deposit must be subject to the same level of oversight and regulation,” a BPI representative said in an official statement. Meanwhile, digital asset advocates argue that such restrictions could slow the growth of financial technology, particularly in the payments sector, and weaken the United States’ competitiveness in the global digital asset market. Not financial advice do your own research. @gvr