According to Cointelegraph, several U.S. banking groups are urging regulators to close the loophole that allows stablecoin issuers and their affiliates to pay interest. The Bank Policy Institute (BPI) warned in a letter to Congress that failing to close this loophole could lead to a loss of $6.6 trillion in deposits, affecting credit flow for U.S. businesses and households.
The GENIUS Act prohibits stablecoin issuers from paying interest to holders, but does not explicitly ban cryptocurrency exchanges or affiliated companies, potentially allowing issuers to circumvent the law through partners. Banking groups believe that the widespread adoption of interest-bearing stablecoins could undermine the banking system and affect credit creation.
The current market capitalization of the stablecoin market is $280.2 billion, accounting for only a small portion of the U.S. money supply. Over 80% of the stablecoin market is dominated by USDT and USDC, with market capitalizations of $165 billion and $66.4 billion, respectively. U.S. President Donald Trump signed the GENIUS Act on July 18, and the stablecoin market is expected to grow to $2 trillion by 2028.
