U.S. community banks are pressing Congress to tighten regulation of stablecoins.
Cointelegraph reported on Tuesday that the American Bankers Association's Community Bankers Committee sent a letter to the Senate. It urged lawmakers to amend last year’s GENIUS Act to ban the provision of interest on stablecoins.
The banks said the law bars stablecoin issuers from paying interest, but exchanges such as Coinbase and Kraken pay interest indirectly and exploit loopholes.
They said stablecoin rewards are driving deposit outflows and putting loans to small businesses, farmers, students and homebuyers at risk. The crypto industry is countering that stablecoins are not for lending and that an amendment would hinder innovation.
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