The GENIUS Act, which crafted a regulatory framework for stablecoin issuers, prohibited payment stablecoin issuers from paying yield, interest or other considerations to stablecoin holders.  This prohibition was added to prevent confusion between uninsured stablecoin wallets and insured bank deposits and to ensure that the law did not create incentives that would undermine bank lending to consumers and small businesses.  However, entities are already evading this requirement by marketing payment of “rewards” and paying interest indirectly to stablecoin holders through crypto exchanges and other third parties that were not the focus of the GENIUS Act.  This incentivizes outflows of deposits to stablecoins and reduces access to credit by allowing payment stablecoins to compete with bank deposits without being subject to the same consumer protections, regulatory oversight and safeguards as a bank.

The Senate’s market structure legislation could address this issue by extending this prohibition to all digital assets market participants.  Senators need to hear how your deposits support your community and why it is important they protect against deposit flight. 

Please ACT Now to ask your Senators to implement this legislative fix in digital assets market structure legislation currently being considered.