Oklahoma Bankers Association We make bankers better!
The Oklahoma Bankers Association, the American Bankers Association and 51 other state bankers associations from across the country joined in sending a joint letter to Congress last month urging lawmakers to clarify and enforce the statutory prohibition on payment stablecoin issuers and affiliated platforms offering yield, rewards or interest to stablecoin holders – a core provision of the GENIUS Act – because of the potential harm to economic activity.
The letter warns certain exchanges and other digital platforms are exploiting a loophole to offer yield-like incentives on stablecoins, a practice that “risks disintermediating core banking activity, including deposit taking and lending, which harms local communities.”
“The GENIUS Act envisioned payment stablecoins as a payments instrument, not an investment product. Congress barred issuers from paying interest for precisely that reason,” the letter states. “Closing the current loophole by clarifying that the prohibition extends to partners and affiliates would restore parity, protect consumers, and align practice with legislative intent.”
The associations emphasize banks operate under strict regulatory frameworks, using deposits to fund lending that supports economic growth. Exchanges, by contrast, “do not perform similar regulated lending activity” and often fund rewards through marketing arrangements or high-risk strategies such as rehypothecation and speculative investments.
“Reducing deposits at banks will impair banks’ ability to make loans,” the groups write. “Requiring banks to increase deposit rates to compete with those offered by exchanges will make credit more expensive, directly affecting the economy – including for small businesses, farmers, homebuyers, students and local governments.”
In the letter, the groups explain the significant consequences of exchanges taking advantage of the interest loophole and the overall mismatch in regulation.