Leading US banking associations, including the American Bankers Association and the Bank Policy Institute, have criticized a Senate proposal addressing stablecoin rewards programs.
The groups argue that the current framework “falls short” of addressing key risks, particularly as crypto platforms expand financial-like services.

Stablecoin Rewards at the Center of Debate

At the heart of the dispute is whether stablecoins—digital assets pegged to traditional currencies—should be allowed to offer reward or yield mechanisms through crypto exchanges.
Coinbase previously signaled progress on the issue, suggesting a compromise had been reached. However, banking groups now contend that the proposal leaves significant gaps.
Angela Alsobrooks also indicated earlier that lawmakers believed the disagreement had been resolved, highlighting the disconnect between policymakers and industry stakeholders.

Threat to Traditional Deposits

Banks warn that allowing stablecoins to generate yield-like returns could effectively transform them into alternatives to traditional savings accounts.
This shift could redirect deposits away from regulated financial institutions, even if the funds remain within the broader financial ecosystem.
The concern is not just competition, but also regulatory parity—banks operate under strict capital and liquidity requirements that may not apply equally to crypto platforms.

Legislative Progress Faces Delays

The disagreement is likely to slow progress on comprehensive crypto legislation, which has already faced setbacks in the Senate.
The legislative process has been further complicated since Coinbase withdrew its support earlier this year, underscoring the fragility of consensus between regulators, lawmakers, and industry participants.

Next Steps and Industry Input

Banking groups plan to submit detailed recommendations to lawmakers, focusing on closing what they describe as loopholes in the current proposal.
Their goal is to ensure that any final framework maintains financial stability while addressing the rapid evolution of digital asset markets.

Outlook

The outcome of this debate will shape how stablecoins integrate into the financial system.
Balancing innovation with regulatory safeguards remains a central challenge, as policymakers attempt to define the future role of crypto within traditional finance.