Crypto Industry Opposes Ban on Stablecoin Rewards

According to Cointelegraph, the Blockchain Association, a non-profit organization advocating for the crypto industry, has expressed strong opposition to a proposed ban on third-party service providers and platforms offering rewards to stablecoin holders. In a letter addressed to the US Senate Committee on Banking, over 125 crypto industry groups and companies signed in protest against the expansion of the GENIUS stablecoin regulatory framework. This framework seeks to prohibit stablecoin issuers from sharing yield directly with customers, and the proposed expansion would include third-party service providers, which the letter argues would stifle innovation and lead to increased market concentration. The letter draws parallels between the rewards offered by crypto platforms and those provided by traditional financial entities such as credit card companies and banks. It argues that prohibiting crypto platforms from offering similar rewards for stablecoins would unfairly benefit established financial service providers. The Blockchain Association emphasizes that the potential benefits of payment stablecoins will not be realized if they cannot compete on equal terms with other payment mechanisms. Rewards and incentives, the letter notes, are standard features of competitive markets. The Blockchain Association has consistently issued statements and letters opposing efforts to restrict crypto platforms from sharing yield-bearing opportunities with customers. They argue that these rewards are crucial for helping consumers offset inflation. Meanwhile, the Federal Deposit Insurance Corporation (FDIC) has proposed a framework that would allow banks to issue stablecoins through subsidiaries, subjecting both the bank and its subsidiary to FDIC rules and financial assessments, including reserve requirements. Despite the FDIC's proposal, the Blockchain Association continues to challenge claims that yield-bearing stablecoins and customer rewards pose a threat to the banking sector and its lending capabilities. The association contends that there is insufficient evidence to support the notion that stablecoin rewards undermine community banks or their lending capacity. Nonetheless, the banking industry has lobbied against yield-bearing stablecoins and crypto platforms sharing yield with clients, fearing that the interest offered on digital asset products could erode banks' market share.