Crypto Groups Reject ABA’s Proposal to Amend GENIUS Act Stablecoin Law

TLDR

• Crypto groups reject ABA’s proposal to change provisions of the GENIUS Act.

• ABA argues the GENIUS Act could distort market incentives by allowing interest payments.

• Crypto groups claim proposed changes would favor traditional financial institutions.

• The GENIUS Act was signed into law last month to regulate stablecoins in the U.S.

Two major crypto advocacy groups, the Blockchain Association (BA) and the Crypto Council for Innovation (CCI), have opposed changes proposed by the American Bankers Association (ABA) to the newly enacted GENIUS Act. The GENIUS Act, signed into law by President Donald Trump last month, provides a framework for stablecoin regulation in the U.S.

In a joint letter sent to Senate Banking Committee leaders, the two groups argued that the amendments suggested by the ABA would fundamentally alter the framework of the GENIUS Act and undermine its goal of fostering innovation in the digital asset ecosystem. The letter emphasized that these changes could restrict competition and limit consumer choice in the rapidly evolving crypto market.

ABA’s Proposal and Concerns

The American Bankers Association, along with 52 other banking groups, expressed concerns over several aspects of the GENIUS Act. The main issue highlighted by these organizations was the law’s provisions on stablecoin interest payments.

They argued that stablecoin issuers could easily bypass the law’s restrictions by utilizing exchanges and brokers, potentially turning stablecoins into stores of value and credit mechanisms.

While the ABA is in favor of restrictions on interest payments, it believes that the current version of the law does not do enough to prevent financial entities from exploiting potential loopholes. The ABA also raised concerns about the potential risks related to deposit liquidity and credit associated with stablecoins that offer interest, which they believe could create instability within the broader financial system.

Crypto Groups’ Response

In their letter, the Blockchain Association and the Crypto Council for Innovation expressed strong opposition to the proposed changes. They argued that amending the GENIUS Act would make it more favorable to traditional financial institutions, potentially limiting the choices available to consumers.

The groups also emphasized the importance of the law in supporting innovation and ensuring that digital finance benefits a wide range of consumers.

“The changes proposed by the ABA would reimagine the language already passed into law,” the groups stated in their letter. “This would introduce a significant policy shift that could create unintended consequences for the digital asset ecosystem.” They also added that removing certain features from stablecoins while allowing similar features in the traditional banking system would unfairly benefit legacy institutions.

Consumer Impact and Financial Inclusion

The two crypto groups also highlighted the potential negative consequences for consumers, particularly those who are underbanked. Many consumers are increasingly relying on digital wallets for payments and savings, making stablecoins an attractive option for storing value. The proposed amendments, according to CCI and BA, could reduce competition and hinder the ability of consumers to access competitive rates on digital assets.

In their response, the crypto groups emphasized that the goal of the GENIUS Act should be to foster financial inclusion by providing more options for consumers, not limiting their choices. “Eliminating these features for stablecoin users, while allowing them in the banking sector, would tilt the playing field in favor of larger banks,” the groups said.

As the debate continues, the future of the GENIUS Act remains uncertain, with both the banking sector and the cryptocurrency industry pushing for changes that reflect their respective interests.

The post Crypto Groups Reject ABA’s Proposal to Amend GENIUS Act Stablecoin Law appeared first on CoinCentral.