ABA Presses Congress to Close Stablecoin Yield Loopholes

Crypto News Regulation

ABA Urges Congress to Tighten GENIUS Act on Stablecoin Yields

Written by Aaron S.,

Editor-In-Chief

Last Updated: January 07, 2026

Key Takeaways

Community bankers urged Congress to amend the GENIUS Act to stop stablecoin issuers and partners from offering any yield or rewards;
Bankers warned that stablecoin yield programs could drain funds from local banks, which would hurt loans for families and small businesses;
The ABA’s council stressed stablecoins lack FDIC insurance and aren’t substitutes for banks supporting local economies.

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ABA Urges Congress to Tighten GENIUS Act on Stablecoin Yields

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On January 6, a group of community bankers in the US urged Congress to amend the GENIUS Act.

They asked lawmakers to specifically block stablecoin issuers, as well as their affiliates and partners, from offering any interest or rewards. Although the law currently prevents stablecoin issuers from directly granting yield, some exchanges work with associated entities to continue providing such rewards.

This concern was outlined in a letter sent to the US Senate by the Community Bankers Council of the American Bankers Association (ABA), a group that includes over 200 community bank leaders.

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The bankers wrote that allowing stablecoin platforms to continue offering yield through partners could drive substantial funds away from traditional lenders. This outflow would make it harder for banks to support local loans to families, small businesses, agriculture, and home purchases.

The letter warned that exploiting gaps in current legislation could damage lending rooted in communities and reduce aid to local economies.

The council noted that stablecoin services generally do not offer FDIC-insured products. They emphasized that these platforms are not replacements for banks, particularly in supporting lending and helping the economy.

Their letter suggested that proposed legislative changes should clearly extend the ban on interest and rewards to include all stablecoin issuers' affiliated entities and partners.

Coinbase $1.77B CEO Brian Armstrong recently warned that revisiting the GENIUS Act would cross a "red line". What did he say? Read the full story.