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The Loophole Turning Stablecoins Into a Trillion-Dollar Fight
The GENIUS Act barred stablecoin issuers from paying interest. But in allowing cryptocurrency exchanges to offer rewards, it set off a high-stakes clash with the US banking industry.
The newly signed Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act requires issuers of stablecoins—cryptocurrencies that claim a value tied to a more stable asset—to fully back their tokens with cash or short-term Treasury bonds, submit to audits, and follow anti-money laundering rules, among other conditions. “To call this a trillion-dollar fight would be an understatement: This is highly fraught territory that banks have jealously guarded,” says former Republican Representative Patrick McHenry of North Carolina, who served as Chair of the House Financial Services Committee until January 2025. “Raising concerns about stablecoin rewards at this stage feels disingenuous and overlooks the extensive debate that shaped the GENIUS Act,” says Cody Carbone, CEO of the Digital Chamber, a crypto-focused advocacy and lobbying group.
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