- Over 125 crypto firms defend stablecoin rewards against banking industry restrictions through congressional letter.
- GENIUS Act separates stablecoin issuers from platforms, allowing exchanges to offer competitive customer rewards.
Over 125 crypto companies have come together to form a coalition that aims to safeguard stablecoin reward programs from limitations that may be imposed by the traditional banking sector. This group of companies has written a letter to Congress advocating for their freedom to provide attractive returns to clients via digital assets.
The disagreement is about the GENIUS Act, which defines distinct roles for stablecoin issuers and the intermediaries that are the platforms, such as exchanges. According to this setting, issuers are not allowed to give interest in a direct way, but platforms still have the option to offer rewards to their users.
Banking Industry Challenges Stablecoin Platform Rewards
Tyler Winklevoss, Gemini co-founder, in a tweet, lambasted banks for reopening settled legislative matters by using regulatory pressure tactics. In his opinion, traditional financial institutions are crossing the line by questioning the established framework, which Congress has already approved.
Now banking groups are urging legislators to not only extend the limitations to issuers but also include platform, based rewards. According to them, these reward programs entail similar risks as the issuer, paid interest; however, the crypto coalition vehemently disagrees with this position.
The sector compares the situation to credit card rewards, which continue to function despite the fact that banks are not allowed to pay interest on deposits. This comparison demonstrates that intermediary platforms can provide advantages without raising the same regulatory issues as direct issuer payments.
The Blockchain Association led a coordinated campaign that attracted support from significant crypto exchanges like Gemini, Coinbase, and Kraken to the Senate Banking Committee leadership. According to the coalition, a restriction on platform incentives would “cut the heart out of competition” in the financial services market in the U. S. across the country.
The question of how ordinary people would be affected by such a move is still at the core of the argument. Traditional bank accounts hardly bring any returns as opposed to crypto ones. Average checking accounts give roughly 0.07%, while savings accounts offer about 0.40% yearly returns to depositors.
Stablecoin incentive schemes provide substantially more returns; thus, they become appealing alternatives for users looking for higher profits from their holdings. The crypto industry cautions that a limitation of such programs would be a transfer of benefits to big banks, with a subsequent disadvantage to small fintech firms.
While big banks aim to be the ones issuing stablecoins in the near future, the industry watchers are saying that the timing of the regulatory crackdown looks like a deliberate move. The group argues that keeping platform rewards is a key factor in ensuring the competitiveness of innovation in digital payment services.
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Source: https://thenewscrypto.com/crypto-giants-battle-banks-over-stablecoin-reward-programs/
