An unprecedented alliance of 125 cryptocurrency and fintech companies has issued a stark warning to U.S. lawmakers: proposed expansions to stablecoin yield restrictions in the GENIUS Act would shield traditional banking institutions from competition while stripping consumers of valuable rewards. The coalition argues that banking lobby efforts to broaden yield prohibitions represent a calculated move to maintain market dominance rather than genuine regulatory concern.
In a powerful show of unity, 125 cryptocurrency and fintech organizations have jointly addressed Congress to oppose what they describe as anti-competitive measures hidden within stablecoin regulation proposals. The coalition's concerns center on attempts to expand yield restrictions in the GENIUS Act far beyond their original scope.
At the heart of the dispute is how stablecoin yields should be regulated. The GENIUS Act currently contains provisions limiting certain yield payments by stablecoin issuers themselves. However, the crypto industry coalition warns that traditional banking interests are lobbying to dramatically broaden these restrictions to encompass third-party rewards programs and consumer incentives offered by platforms and service providers—not just issuers.
This distinction matters significantly. While direct issuer payments represent one regulatory question, third-party rewards programs operate under entirely different mechanics and serve different purposes. The coalition argues that conflating these two categories would effectively eliminate competitive consumer products that have emerged in the digital asset space.
"This isn't about responsible regulation—it's about market protectionism," industry representatives argue. Traditional banks have long enjoyed near-monopolistic control over payment systems and deposit accounts, often offering minimal returns to consumers while profiting substantially from those same deposits.
Stablecoins have emerged as disruptive alternatives, with various platforms offering rewards programs to users as part of competitive positioning. These programs have attracted millions of users seeking better returns than traditional savings accounts provide. By prohibiting such incentives, critics say Congress would be picking winners and losers rather than establishing a level playing field.
The coalition's letter emphasizes that overly broad yield restrictions would: - Eliminate consumer choice and competitive pressure on traditional banks - Stifle innovation in digital finance - Protect incumbent institutions from market forces - Reduce financial inclusion opportunities
As Congress continues debating comprehensive stablecoin legislation, this coordinated pushback from 125 organizations signals that the crypto industry views yield restrictions as a critical battleground. The outcome will likely determine whether stablecoins can truly compete with traditional banking products or whether regulatory capture will preserve the status quo.
The debate underscores broader tensions between legacy financial institutions and digital asset innovators, with consumer interests hanging in the balance.