Banks Lobby Us Treasury For Blanket Stablecoin Yield Ban, Coinbase...

Coinbase insists that the US Treasury cannot override Congress’s intent on the GENIUS Act, but banks continue to press for a blanket ban on stablecoin interest.

The US Department of the Treasury is facing conflicting feedback from crypto companies and traditional banking groups over how to implement the GENIUS Act, the law that regulates stablecoin payments in the US.

In a letter on Tuesday, Coinbase urged the Treasury to limit a ban on stablecoin interest payments exclusively to stablecoin issuers, while allowing it for non-issuers, such as crypto exchanges. Coinbase said its proposal aligns with Congress’s intent when passing the legislation.

At the same time, several banking groups, led by the Bank Policy Institute (BPI), have pressed the Treasury to extend the prohibition to non-issuers, advocating for a blanket ban on stablecoin interest payments.

The recommendations were submitted in response to the Treasury’s advance notice of proposed rulemaking (ANPRM), marking the second round of public comments on the implementation of the GENIUS Act, which concluded on Tuesday.

In a joint announcement on Wednesday, BPI and several banking groups said they urged the Treasury to extend the ban on stablecoin interest payments to digital asset service providers, including exchanges and affiliates.

“Implement the GENIUS Act’s prohibition on the payment of interest or yield on payment stablecoins [...] whether paid directly by an issuer or indirectly by an issuer’s affiliates or partners,” BPI said in a separate statement on Tuesday.

The same group previously opposed the same issue in August, arguing that stablecoin interest payments may potentially trigger $6.6 trillion in deposit outflows from the traditional banking system.

According to Coinbase, Treasury has to follow the congressional intent in implementing the GENIUS Act, including preserving the right of non-issuers to offer interest on stablecoin holdings.

“Congress went no further,” Coinbase said, adding: “It declined to include non-issuer third parties within that prohibition because banning other types of payments on stablecoins across the board would have inhibited growth and innovation of the stablecoin market — contrary to the GENIUS Act’s core purposes.” The exchange concluded:

Source: CoinTelegraph