As the Senate Banking Committee unveils the updated draft of the crypto market structure bill, called the CLARITY Act, another significant dispute is brewing over the GENIUS Act, which zeroes in on stablecoin regulations. The banking lobby is advocating for substantial modifications, particularly concerning rewards associated with stablecoins.
Are Big Banks Disrupting Stablecoin Competition?
Summer Mersinger, CEO of the Blockchain Association and a vocal proponent for the crypto sector in Congressional negotiations, expressed her concerns via social media platform X (formerly Twitter), drawing attention to the state of discussions following the bipartisan approval of the GENIUS Act.
She claimed that the “Big Bank lobby” is urging Congress to revisit established legislation regarding stablecoin rewards—not due to genuine concerns about emerging risks but as a means to hinder competition that ultimately benefits consumers.
Mersinger stated, “When Big Banks face competition, they don’t improve services. They lobby to handicap alternatives. And the consumer suffers.”
She highlighted that the average American savings account currently yields a meager 0.39%, while checking accounts provide an even less attractive rate of 0.07%. This juxtaposes sharply against the Federal Funds rate, which fluctuates between 3.50% and 3.75%.
Mersinger argued that this disparity is not merely a byproduct of market forces; rather, it stems from substantial barriers that major banks have erected, preventing customers from accessing better returns.
She underscored that the dominance of the six largest banks in the U.S., which manage assets equivalent to 60% of the nation’s Gross Domestic Product (GDP), further perpetuates this trend.
Moreover, she asserted that whenever new technologies emerge, capable of providing consumers with superior returns, banks consistently invoke claims of “systemic risk” while simultaneously lobbying against these advancements.
Ultimately, Mersinger and her colleagues advocate for policies that prioritize consumer choices, urging Congress to heed the ongoing dialogue between the banking sector and the burgeoning crypto industry.
Expert Advocates For Fair Returns
Market expert Omid Malekan also chimed in, criticizing the idea that stablecoin holders shouldn’t earn yields. He contends that the interest generated from taxpayer-backed Treasury bills should benefit the average American instead of enhancing the fortunes of bank executives and shareholders.
Malekan called for a broader conversation on capping credit card interest rates and transaction fees and advocated for implementing a windfall profit tax on the net interest margins of banks. He asserted, “An industry this anti-competition and consumer choice should suffer the consequences.”
Support for Malekan’s perspective is strengthened by recent earnings reports from major banks. JPMorgan Chase, for instance, recently reported $25 billion in net interest income, showcasing the profits made by not offering higher returns to savers. Malekan dismissed the argument that stablecoins paying interest could negatively impact lending as unfounded.
