🤑 Banks Cry Foul: Stablecoins Stealing Their Lunch Money? 🤑

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  • Ah, the unbacked stablecoin earnings-a thorn in the side of the venerable banks, threatening to pilfer their precious deposit bases. How quaint! 😏
  • Yield ban? What yield ban? The law, it seems, has left a chink in its armor, and the stablecoin affiliates are only too eager to exploit it. Bravo, gentlemen! 🎭
  • Reform, they cry! Lest the credit tightens and loans become as scarce as honesty in a politician’s speech. Oh, the drama! 🎭

A gap in the GENIUS Act-a gap, mind you, not a mere crack, but a veritable chasm-has sent the banking consortia of the United States into a tizzy. This chasm allows stablecoin issuers to offer yields through affiliates, a practice that, they warn with great solemnity, could disrupt the delicate balance of banks and credit. How ever shall we survive such a calamity? 😱

The Bank Policy Institute (BPI), along with its esteemed colleagues in the banking world, has taken up its quill to beseech Congress to tighten the reins. They fear-oh, how they fear!-that the advent of yield-bearing stablecoins might siphon off as much as 6.6 trillion dollars in deposits from their coffers. According to their dire predictions, this would spell doom for lending and send borrowing costs soaring. Heaven forbid! 🙄

Stablecoin Yield: A Siren’s Call to Deposits

Stablecoins, those mischievous upstarts, are neither bank deposits nor investment funds, yet they dare to meddle in the realm of payments. Their issuers, unencumbered by the stringent rules that bind banks, do not deign to finance lending or invest like money market funds. Oh, the audacity! 😤

The GENIUS Act, in its infinite wisdom, prohibits stablecoin issuers from paying direct interest. But-and here’s the rub-it says nothing of affiliates or exchanges offering such rewards indirectly. A loophole, you say? Why, it’s practically an invitation to mischief! 😈

The Treasury Department, ever the Cassandra, warns of a potential deposit flight to the tune of 3.5 billion dollars. This, they claim, would raise rates and throttle business and consumer credit. The horror! The horror! 😱

The Devil in the Details: How Yields Slip Through the Net

The law, in its attempt to be thorough, forbids issuers from paying interest or yield. Yet, exchanges and affiliates, those cunning rogues, find ways to reward stablecoin holders. Take, for instance, the USDC tokens of Circle, which, when held on Coinbase and Kraken, yield returns despite the GENIUS Act’s restrictions. How devious! 😏

Banks, poor dears, wail that these indirect yields are eroding their deposit bases. Without deposits, they lament, how can they fund loans? The economy, they warn, is at risk as borrowing costs rise and credit dries up. Oh, the tragedy! 🎭

The banking consortia, with hands wrung and voices quivering, implore the government to seal this fatal loophole and restore order to the financial system. Stablecoins, they declare, should not generate interest on deposits like regulated banks. The nerve of them! 😤

This saga, my dear reader, highlights the growing tension between crypto innovation and traditional finance regulation. The rapid adoption of stablecoins threatens the very foundations of the banking deposit and investment systems. Whatever shall we do? 😱

Clarity in regulations, they say, is needed to foster innovation while safeguarding economic credit flows. In the meantime, banks stand firm against the unauthorized payment of yields that menace their very existence. Will they prevail? Only time will tell. 🕰️

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2025-08-15 00:43