2 hours ago
A conjugation of US banking groups, led by the Bank Policy Institute (BPI), has urged lawmakers to code a large oversight successful the precocious passed GENIUS Act stablecoin bill.
In an Aug. 12 statement, the BPI conceded that the measure blocks stablecoin issuers from offering nonstop yields oregon involvement to holders.
However, they pointed retired that the connection successful the stablecoin bill leaves a captious spread that does not screen crypto exchanges oregon affiliated firms, which could spouse with issuers to present indirect yields.
According to the banks, this could trigger a monolithic displacement of deposits from the banking assemblage to integer assets. The radical estimates imaginable outflows of up to $6.6 trillion.
Such a move, they say, could shrink lending capacity, propulsion involvement rates higher, and summation borrowing costs for US businesses and households.
They added:
“Congress indispensable support the travel of recognition to American businesses and families and the stableness of the astir important fiscal marketplace by closing the stablecoin outgo of involvement loophole.”
Crypto stakeholders react
Industry figures rapidly pushed backmost against the banks’ warning, calling it an effort to stifle competition.
Coinbase Chief Legal Officer Paul Grewal described the concerns arsenic overstated, noting that the US Congress has already considered and rejected akin proposals.
He said:
“This was nary loophole and you cognize it. 376 Democrats and Republicans successful the House and Senate rejected your unrestrained effort to debar competition. So did 1 President.”
Coinbase CEO Brian Armstrong echoed akin views, portion suggesting that the banks are motivated much by nett extortion than systemic risk.
Similarly, Jake Chervinsky, CLO astatine Variant Fund, pointed out that the banks’ regulatory power fell short, and the resulting interest is mostly self-serving.
Meanwhile, Mikko Ohtama, co-founder of Trading Protocol, noted that banks are resisting stablecoins due to the fact that they endanger the accepted deposit models.
According to him:
“The banks request to springiness much competitory offers for savings accounts and such. This benignant of contention would beryllium amended for the customers of the banks. It’s a elemental process: radical won’t determination wealth retired of banks if the banks springiness them a bully deal.”
The station US banks pass of $6.6 trillion displacement to stablecoins amid GENIUS Act debate appeared archetypal connected CryptoSlate.
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