Major U.S. banking associations have called on federal regulators to uphold existing restrictions that prevent stablecoin issuers from offering interest or yield on customer holdings, warning that allowing such payments could undermine financial stability and blur the lines between banking and nonbank digital-asset activities. The appeal highlights growing tension between traditional banks and emerging payment-stablecoin providers seeking parity with deposit products.
The American Bankers Association, joined by state-level banking associations, urged the U.S. Treasury, the Federal Reserve, and the Office of the Comptroller of the Currency to preserve the existing framework outlined in the Genius Act, which prohibits payment-stablecoin issuers from paying interest to token holders. The groups argue that the rule is essential to maintaining a clear distinction between regulated deposits and digital tokens designed for transactional use.
According to the joint statement, allowing interest-bearing stablecoins could create unfair competition between unregulated issuers and federally insured institutions. Bank representatives noted that such a shift could incentivize deposit migration away from traditional banks, potentially weakening liquidity channels that support credit markets and payments infrastructure.
The associations also expressed concern that stablecoins offering yield might resemble money-market or investment products without adhering to equivalent oversight. They emphasized that stablecoins intended for payments must remain one-to-one backed by cash or high-quality liquid assets to maintain their function as stable means of exchange. Extending interest or reward features, they warned, would fundamentally change the nature of the product.
The letter reaffirmed the banking sector’s support for clear, risk-based regulation of payment stablecoins under existing supervisory frameworks. It encouraged federal agencies to collaborate on a cohesive national approach that integrates innovation while protecting financial stability. Industry leaders added that banks remain open to issuing compliant stablecoins directly, provided regulatory standards are applied consistently across all entities.
The debate over stablecoin regulation has intensified as lawmakers consider broader legislation defining the roles of issuers, custodians, and central banks. The discussion also intersects with ongoing research into a potential U.S. central bank digital currency, which could coexist with privately issued stablecoins under strict operational and disclosure requirements.
Analysts expect policymakers to continue refining guidance into 2026 as stablecoin usage expands in payments and remittances. The banking industry’s latest intervention signals a strong effort to ensure that innovation does not erode safeguards that underpin the stability of the U.S. financial system.
