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More than 125 cryptocurrency industry participants are pushing back against efforts to expand restrictions on stablecoin rewards through new legislation. The Blockchain Association coordinated the opposition letter sent Thursday to the Senate Banking Committee.
Signatories include the Bitcoin Policy Institute, Crypto Council for Innovation, DeFi Education Fund, Solana Policy Institute, the Digital Chamber, along with major firms such as a16z Crypto, Coinbase, Gemini, Kraken and Ripple.
<h2 id="what-happened-legislative-dispute">What Happened: Legislative Dispute</h2>
The GENIUS Act, signed into law by President Trump on Jul. 18, established a federal regulatory framework for dollar-backed digital tokens known as stablecoins. The legislation prohibits stablecoin issuers from offering "any form of interest or yield."
Banking industry groups now <a href="https://bitcoinist.com/crypto-industry-opposition-limits-stablecoin-reward/" rel="noopener noreferrer nofollow">argue</a> this prohibition should extend to other entities providing rewards to stablecoin holders. They characterize platform rewards as a "loophole" that conflicts with congressional intent.
Summer Mersinger, CEO of the Blockchain Association, says that reopening the issue before rulemaking begins "just doesn't make any sense." She questioned the certainty legislation provides if Congress can immediately revisit enacted bills.
The industry letter argues Congress intentionally preserved the ability of platforms and intermediaries to offer lawful rewards while prohibiting issuers from paying interest.
"Congress prohibited stablecoin issuers from paying interest or yield to those holding stablecoins while intentionally preserving the ability of platforms, intermediaries, and other third parties to offer lawful rewards or incentives to consumers," the letter states.
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<h2 id="why-it-matters-competition-concerns">Why It Matters: Competition Concerns</h2>
Banks fear rewards programs could drive deposit outflows, potentially reducing capital available for lending. Some estimates cite potential outflows as high as $6.6 trillion from the traditional banking system.
The cryptocurrency industry disputes these projections. A Jul. 2025 analysis by Charles River Associates found no statistically significant relationship between stablecoin adoption and community bank deposit levels.
Industry representatives argue that approximately $2.9 trillion in bank reserves currently earn interest at the Federal Reserve rather than funding loans.
"Opposition to stablecoin rewards reflects protection of incumbent revenue models, not safety and soundness concerns," the letter states.
Democrats acknowledged concerns about interest payments potentially pulling deposits from the banking system. They indicated Congress could develop solutions that protect banks while permitting rewards and incentives.
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Crypto Firms Challenge Banking Sector On Stablecoin Reward Restrictions

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