A growing coalition of U.S. banks is urging lawmakers to revisit components of the GENIUS Act, particularly those dealing with reward and incentive structures offered by non-bank stablecoin issuers. Section 16(d) clearly prohibits issuers from paying yield directly, a safeguard designed to keep stablecoins from becoming substitutes for insured deposits without carrying the same oversight and risk standards. Yet banks argue that the intent of this prohibition may be weakened in practice. They point to reward structures routed through exchanges, platforms, and third-party partners that may operate beyond the banking regulatory perimeter. By contrast, similar programs offered by banks would fall under capital, liquidity, and supervisory requirements that bind both the institution and its affiliates. On the other hand, many in the digital asset community view this as a potential capitulation that limits consumer choice and hands an advantage to incumbent financial institutions. However, as the banking system and digital asset ecosystem become increasingly interconnected, the question is not about what this change may take away, but rather what it could unlock.
Why Banks See “Rewards” as a Pressure Point
Bank advocates have framed the current language as a loophole: stablecoins cannot earn interest from bank-held deposits, yet they may earn yield through alternative crypto platforms. In a world where tokenized dollars move globally at high speed and low cost, the competitive threat to traditional deposits is real. The figure often cited, up to $6 trillion in potentially portable deposits, illustrates why this issue commands the attention of banking institutions and regulators.
Banks are risk managers at their core. They specialize in compliance infrastructure, underwriting standards, custodial safeguards, and fraud protection. Their concern is straightforward: yield-bearing instruments outside the bank regulatory perimeter reintroduce forms of opacity, counterparty risk, and moral hazard that policymakers have spent decades trying to eliminate. Regardless of whether the crypto industry agrees with the severity of the concern, it is one regulators view through a familiar lens.
Why Stablecoin Stakeholders Are Justified in Their Concerns
For stablecoin issuers and platforms, yield has been more than a convenience. It has been a mechanism to accelerate adoption, onboard new users, and reward participation in a developing financial technology. Eliminating yield carries consequences, particularly for consumers who have grown comfortable earning returns on digital dollars. It is reasonable for the industry to view this as disproportionately benefitting traditional banks.
Yet the long-term trajectory of stablecoins will not be defined by a single incentive mechanism. Their future depends on something more durable: regulatory clarity, interoperability, and the confidence of institutional participants who have waited for guardrails before entering the market.
The Strategic Case for Concession
Removing yield programs may ultimately serve as a strategic down payment on something more valuable, which is regulatory legitimacy.
- For banks, it signals the industry is prepared to compete without relying on regulatory arbitrage.
- For stablecoin issuers, it opens the door to deeper cooperation, infrastructure access, and partnerships that have stalled due to compliance uncertainty.
- For Congress, it removes a key hurdle that has slowed consensus and increases the likelihood the CLARITY Act advances early next year. By demonstrating good faith on a high-profile negotiation point, the industry makes it easier for bipartisan sponsors to rally the votes necessary to move the bill forward.
Put simply, banks seek risk containment, crypto innovators seek market access, and lawmakers seek assurance that both can coexist. This concession advances all three.
Stablecoins Were Never Defined by Yield
Just as important, the core value of stablecoins has never been defined by yield. Their real breakthrough lies in:
- Near-instant settlement
- Low-cost, borderless transferability
- 24/7 availability outside traditional banking hours
- Programmable financial logic
- Transparent and auditable on-chain records
- Interoperability across platforms and networks
- Non-custodial digital sovereignty that allows users to hold and move value without relying on a centralized intermediary
These characteristics are what make stablecoins a superior payment instrument, not temporary yield incentives.
Yield accelerated experimentation, but utility drives adoption. Supporting this concession does not sacrifice what makes stablecoins transformational, it reinforces it. The path to mass adoption is paved with reliability, clarity, and trust.
Why This Benefits Both Sides, and the U.S. Dollar
Banks stand to gain:
- A regulatory perimeter aligned with risk management practices
- Reduced fears of destabilizing deposit flight
- A clearer and safer pathway to participate in digital currency initiatives
Stablecoin stakeholders stand to gain:
- Expanded access to banking infrastructure
- Institutional participation at scale
- A regulatory environment that supports growth instead of limiting it
- A realistic path to passing the first major piece of federal crypto legislation, anchoring stablecoins inside the regulatory framework rather than outside it
Both sides share another strategic incentive: promoting the continued global dominance of the U.S. dollar. Dollar-backed stablecoins represent the most successful digital version of the dollar ever created, circulating across borders, platforms, and ecosystems that traditional banking alone cannot reach. Ensuring these instruments are regulated, trusted, and interoperable extends the dollar’s relevance into the digital age and strengthens U.S. financial influence, liquidity, and stability.
This compromise does not end competition. It professionalizes it.
What Consumers Ultimately Gain
Consumers deserve more than additional financial products. They deserve better ones: faster transactions, lower costs, clearer disclosures, and global reach. Combining the accessibility and programmability of blockchain networks with the security and compliance rigor of the banking sector can deliver what neither system has achieved alone.
This Is Not a Step Back for Financial Inclusion
Some worry that eliminating yield programs could hinder financial inclusion, but the evidence suggests otherwise. Today, the underbanked and unbanked are not adopting stablecoins for yield. Their primary barriers are far more fundamental: financial literacy, trust in new technologies, and the practical ability to convert value between digital and local currencies. On and off ramps remain a bottleneck, especially for individuals without access to traditional bank accounts, since ACH transfers are still the dominant method for moving funds into and out of digital assets. Meaningful financial inclusion will depend on education, simplified access, multilingual resources, and infrastructure that allows people to spend, save, and send value on their terms. Regulatory clarity is the prerequisite that enables investment in these solutions and signals that stablecoins are not experimental tools, but usable financial instruments.
The Moment Requires Strategic Maturity
The GENIUS Act was a milestone, but it is only the first step toward modernizing America's financial infrastructure for the digital era. Every stakeholder, including banks, platforms, issuers, and policymakers, will navigate compromise as this new architecture takes shape.
For stablecoin leaders, conceding on yield may be the price of admission into a future where digital dollars are trusted, interoperable, and used by millions more people around the world. The crypto industry has thrived on innovation and adaptability. It will do so again.
If history demonstrates anything about the evolution of digital assets, it is that the innovations ahead will far outweigh the compromises behind.