The Bank Policy Institute (BPI) is pushing for fixes to perceived "loopholes" in the GENIUS Act, a proposed stablecoin regulation law, as reported by CoinTelegraph. The BPI argues the current draft unintentionally favors exchanges and affiliated companies over traditional banks. Their letter to Congress highlights a critical concern: the GENIUS Act prohibits stablecoin issuers from paying interest directly, but this restriction doesn't extend to exchanges or affiliated entities. The BPI warns that this disparity could trigger a massive $6.6 trillion outflow from traditional bank deposits, as users seek yield-bearing stablecoin options. The BPI emphasizes the fundamental difference between stablecoins and regulated financial products like bank deposits and money market funds. These traditional institutions generate profits through loans and securities investments, justifying interest payments. The BPI contends that allowing interest payments on stablecoins, directly or indirectly, creates an uneven playing field and potentially destabilizes the banking sector. The GENIUS Act needs these loopholes addressed. ```
