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The Blockchain Association, a non-profit crypto advocacy organization, wrote a letter to the US Senate Committee on Banking, signed by over 125 crypto industry groups and companies, opposing a ban on third-party service providers and platforms offering customer rewards to stablecoin holders.
Expanding the prohibition on stablecoin issuers sharing yield directly with customers, outlined in the <a href="https://cointelegraph.com/explained/what-does-the-us-genius-act-mean-for-stablecoins" rel="noopener noreferrer nofollow">GENIUS stablecoin regulatory framework</a>, to include third-party service providers stifles innovation and leads to “greater market concentration,” the letter <a href="https://theblockchainassociation.org/wp-content/uploads/securepdfs/2025/12/Letter-to-Senate-on-Stablecoin-Rewards.pdf" rel="noopener noreferrer nofollow" target="_blank">said</a>.
The letter compared the rewards offered by crypto platforms to those offered by credit card companies, banks and other traditional payment providers.
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 <img alt="Banks, United States, Stablecoin, Genius Act, Yields" src="https://s3.cointelegraph.com/uploads/2025-12/019b382a-1cf0-72bd-a9ad-0f0e92084def.png" title="">
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 The letter opposes efforts to stop crypto platforms from sharing yield with customers. Source: <a href="https://theblockchainassociation.org/wp-content/uploads/securepdfs/2025/12/Letter-to-Senate-on-Stablecoin-Rewards.pdf" rel="noopener noreferrer nofollow" target="_blank">The Blockchain Association</a>
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Prohibiting crypto platforms from offering similar rewards for stablecoins gives an unfair advantage to incumbent financial service providers, the Blockchain Association said.&nbsp;
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 “The potential benefits of payment stablecoins will not be realized if these types of payments cannot compete on a level playing field with other payment mechanisms. Rewards and incentives are a standard feature of competitive markets.”
</blockquote>
The Blockchain Association has issued several statements and <a href="https://theblockchainassociation.org/wp-content/uploads/2025/09/Blockchain-Association-Letter-on-GENIUS-Act.pdf" rel="noopener noreferrer nofollow" target="_blank">letters</a> pushing back against efforts to prohibit crypto platforms from sharing yield-bearing opportunities with customers, arguing that these rewards help consumers offset inflation.
Related: B<a href="https://cointelegraph.com/news/canada-reveals-standard-good-money-stablecoins" rel="noopener noreferrer nofollow" target="_self">ank of Canada lays out criteria for ‘good money’ stablecoins</a>
<h2 id="fdic-paves-the-way-for-banks-to-issue-stablecoins">FDIC paves the way for banks to issue stablecoins</h2>
The Federal Deposit Insurance Corporation (FDIC), the US regulatory agency that oversees and insures the banking sector, published a <a href="https://www.fdic.gov/board/federal-register-notice-approval-requirements-issuance-payment-stablecoins-subsidiaries-fdic" rel="noopener noreferrer nofollow" target="_blank">proposal</a> on Tuesday that would <a href="https://cointelegraph.com/news/us-banks-issue-stablecoins-fdic-genius-act" rel="noopener noreferrer nofollow">allow banks to issue stablecoins</a> through subsidiaries.&nbsp;
Under the proposal, both the bank and its stablecoin subsidiary would be subject to FDIC rules and assessments for financial fitness, including reserve requirements.
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 <img alt="Banks, United States, Stablecoin, Genius Act, Yields" src="https://s3.cointelegraph.com/uploads/2025-12/019b382e-4633-7d13-90f5-498e58023f35.png" title="">
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 The FDIC proposal to allow banks to issue stablecoins. Source: <a href="https://www.fdic.gov/board/federal-register-notice-approval-requirements-issuance-payment-stablecoins-subsidiaries-fdic" rel="noopener noreferrer nofollow" target="_blank">FDIC</a>
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The Blockchain Association continues to push back on claims that <a href="https://cointelegraph.com/learn/articles/yield-bearing-vs-traditional-stablecoins" rel="noopener noreferrer nofollow">yield-bearing stablecoins</a> and sharing rewards with customers <a href="https://cointelegraph.com/news/yield-bearing-stablecoins-kill-banking-senator-gillibrand" rel="noopener noreferrer nofollow">threaten the banking sector</a> and bank lending.
“Evidence does not support claims that stablecoin rewards threaten community banks or lending capacity,” the Blockchain Association <a href="https://theblockchainassociation.org/wp-content/uploads/securepdfs/2025/12/Letter-to-Senate-on-Stablecoin-Rewards.pdf" rel="noopener noreferrer nofollow" target="_blank">said</a>, adding that it is difficult to make the case that bank lending is actually constrained by customer deposits.
Despite this, the banking industry has <a href="https://cointelegraph.com/news/coinbase-urges-treasury-preserve-stablecoin-yields-non-issuers" rel="noopener noreferrer nofollow">lobbied against yield-bearing stablecoins</a> and crypto platforms sharing yield with clients over fears that interest offered on digital asset products will <a href="https://cointelegraph.com/news/bankers-push-back-against-genius-stablecoin-act" rel="noopener noreferrer nofollow">erode the market share of banks</a>.
Magazine: <a href="https://cointelegraph.com/magazine/unstable-coins-de-pegging-bank-runs-other-risks-2023/" rel="noopener noreferrer nofollow">Unstablecoins: Depegging, bank runs and other risks loom</a>

Blockchain Association says no to expanding stablecoin yield prohibition

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