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The Banking Association calls for amendments to the GENIUS Act to beware of stablecoin regulatory loopholes.
According to reports, the largest banking association in the United States is urging senators to fix the so-called loopholes in the stablecoin bill signed by President Trump last month, claiming that these loopholes could harm the broader financial system.
This week, the American Bankers Association (ABA) and 52 other banking organizations sent a letter to the leadership of the Senate Banking Committee, proposing amendments to the "U.S. Stablecoin Investment and Innovation Act" (GENIUS). The letter pointed out concerns regarding interest payments, state-level regulation, and non-financial companies issuing stablecoins.
The focus of the controversy lies in the fact that the GENIUS Act's ban on paying interest to holders of stablecoin issuances is considered too lenient. Although these groups support the restrictions, they believe that the new law can easily be circumvented by exchanges, brokers, and other affiliated parties, distorting market incentives and transforming stablecoins from mere payment tools into potential stores of value and credit instruments.