The American Bank declares war on stablecoins! Joining forces with the 52 state associations to plug the GENIUS Act loopholes and prohibit the platform from paying interest to coin holders.

2025-12-22 10:05:16

On December 18, the American Bankers Association (ABA) sent a letter to Congress in conjunction with 52 state banking associations, directly pointing out the loophole in the GENIUS Act signed in July this year: it prohibits stablecoin issuers from directly paying interest/rewards but does not block related parties (such as platforms).

As a result, CB gives USDC users a 4% annualized return, while PayPal offers 3.5% for PYUSD—neither are issuers, just “platforms.” Banks are furious: this is stealing their deposit business! If the loopholes are not closed, hundreds of billions in deposits could flow out, leading to the collapse of the credit system. Banks' concerns are reasonable, but history tells us: regulatory delays do not equate to prevention. Stablecoins may become a new vehicle for dollar hegemony, and banks will ultimately become the “tears of the era.”

Core Content of the Bank's “Declaration of War” Letter

Key points of the ABA + 52 State Association joint letter:

Question	Details	Bank Concerns
GENIUS Act loophole	Prohibits issuers from paying interest, but related platforms can circumvent	CB 4%, PayPal 3.5% annual rewards
Business Impact	Stablecoins become an alternative to “interest-bearing deposits”	Deposit outflow → Lending capacity declines → Community loans affected
Strategic Demands	Plug loopholes, prohibit platforms from providing returns/rewards/interest to token holders	Maintain the core deposit-loan model of banks

The bank stated: The platform exploits loopholes to “undermine core banking operations, including deposit acceptance and lending, thereby harming local communities.” Translation: You're robbing me!

Why are banks worried about being reasonable?

The essence of the banking business model: low-interest deposits, high-interest loans, earning the interest spread. Deposits are the entry point for everything (payments, wealth management, trust, etc.).

Comparison	Traditional Bank Savings	Interest-Generating Stablecoin Platform
Annual Interest Rate	Average 0.4%-0.6%	3.5%-4% (10 times difference)
Attractiveness	Low	High, funds are easily outflowing
Scale Risk	-	Trillions of dollars in deposits may be lost

The original intention of the GENIUS Act: stablecoins are only payment tools, not investment products - to protect the foundation of bank deposits. If interest-bearing assets run rampant, the credit system will be shaken.

Short-term Patch vs Long-term Bypass: Banks Delaying Does Not Equal Victory

Short-term: The bill will take effect in January 2027 or 120 days after regulation, Congress or patches will block platform interest payments.
Long-term: It doesn't matter even if it's blocked - yield transfer packaging layer:
Tokenized Treasury Bond Fund
- Currency market tokens (built on payment stablecoins)

The form changes, but the essence remains the same: funds still flow into high-yield crypto ecosystems.

Historical Similarities:

Taxi lobbying suppresses Uber → ridesharing becomes mainstream
Record label sues Napster → Streaming reshapes music

Banks exchange regulation for time, striving for digital transformation (such as embedding stablecoins in bank apps).

Larger Context: Dollar Hegemony vs. Banking Partial Interests

The highest strategy of the United States: to maintain the dominance of the US dollar and uphold the financing of US debt.

Global US Dollar Reserve Ratio: 72% → 59% (BRICS De-dollarization Pressure)
Stablecoin = Digital extension of the US dollar: Promoting the US dollar stablecoin, revitalizing global payment dominance.

Bank resistance meets national interests: the government is more inclined towards the expansion of dollar stablecoins rather than protecting traditional banks.

Each generation spawns its own legends: banks may become the “tears of the era”, and stablecoins are the offspring of the next generation.

What do you think about banks “declaring war” on stablecoins? Let's chat in the comments～ A. The bank is reasonable and needs to protect deposits. B. Stablecoins win, banks lag behind C. Vulnerabilities will be blocked, short-term benefits to banks D. The dollar hegemony relies on stablecoins for survival

Take a step, see a step - innovation always triumphs over old models!

USDC-0,05%

PYUSD-0,09%

View Original

Last edited on 2025-12-22 10:13:17

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.