U.S. banking industry warns: Block loophole in the GENIUS Act stablecoin earnings, or it may trigger a $6.6 trillion deposit outflow.

U.S. banks are warning Congress to close the "yield loophole" that may be exploited by stablecoin issuers in the "GENIUS Act." The Bank Policy Institute (BPI) pointed out that this loophole could allow stablecoin issuers to indirectly pay interest or yields to coin holders through subsidiaries, potentially triggering a $6.6 trillion outflow of deposits and posing a significant threat to the U.S. credit system.

The "Yield Gap" of Concern to the Banking Sector

The "GENIUS Act" explicitly prohibits stablecoin issuers from directly paying interest or returns to coin holders, but BPI points out that this ban does not cover cryptocurrency exchanges or partners associated with the issuers.

Potential avoidance methods: Issuers can provide returns to coin holders through subsidiaries or exchanges, circumventing legal restrictions.

Market example: Some USDC holders can earn rewards when holding coins on CEX exchanges, which is exactly the model that concerns the banking industry.

Concerns in the Banking Sector: Impact on Credit and Deposit Stability

(Source: U.S. Treasury)

BPI, in conjunction with the American Bankers Association, the Consumer Bankers Association, the Independent Community Bankers of America, and the Financial Services Forum, emphasized in a letter to Congress:

Stablecoins differ from bank deposits and money market funds as they do not provide funding for loans and do not invest in securities to generate returns.

If the returns on stablecoins are widely adopted, it may attract a large amount of funds away from the banking system, weakening banks' ability to attract deposits and issue loans.

The report from the U.S. Treasury indicates that this situation could lead to a $6.6 trillion outflow of deposits, particularly during times of economic stress, which would exacerbate credit tightening, drive up Interest rates, and increase financing costs for businesses and households.

Current Status and Growth Expectations of the Stablecoin Market

Current scale: The total market value of global stablecoins is approximately $280.2 billion, which accounts for only a small portion of the dollar money supply (22 trillion dollars).

Market structure: Tether (USDT) accounts for about 80% market share, with a market capitalization of $165 billion; USDC has a market capitalization of approximately $66.4 billion.

Growth Forecast: The U.S. Treasury Department projects that by 2028, the stablecoin market will reach a size of $2 trillion.

Strategic Significance of the 《GENIUS Act》

The bill was signed by U.S. President Donald Trump on July 18, 2025, aiming to promote stablecoins pegged to the dollar, strengthen the dollar's dominant position in the global reserve currency system, and compete with other international currencies.

However, the banking industry believes that if the loopholes in revenue are not plugged, the bill may cause structural impacts on the domestic banking industry and credit markets while promoting the internationalization of the US dollar.

Conclusion

The warning from the U.S. banking sector regarding the stablecoin yield loophole in the GENIUS Act highlights the delicate balance between digital asset regulation and traditional financial stability. As the stablecoin market rapidly expands, finding a balance between promoting innovation and maintaining financial security will become a central issue in U.S. financial policy in the coming years. For more on crypto regulation and market dynamics, please follow the official Gate platform.