The Battle After the GENIUS Act: Banks vs. Blockchain, Who Will Prevail?

Question

【Crypto World】The US banking sector has been making quite a fuss lately. Community bankers are pressuring Congress to crack down hard on yield-bearing stablecoins. Their reasoning is straightforward—recently passed GENIUS stablecoin legislation left a regulatory loophole. If stablecoins start offering yields, it could pull trillions of dollars in deposits onto the blockchain, and those funds that are ultimately siphoned off were originally used by banks to lend to small businesses and families.

But people in the crypto space see it differently. The Blockchain Association quickly responded, saying that banning such rewards is just a way to stifle competition, and reassuringly added—stablecoins won’t drain bank funds because banks themselves hold trillions of dollars in Federal Reserve reserves.

Both sides stick to their arguments. Essentially, traditional finance and Web3 have completely different understandings of the prospects for stablecoins. This issue is now in the spotlight and is likely to become a key topic in broader cryptocurrency legislation discussions soon.

StakoorNeverSleeps · Accepted Answer

What are banks afraid of? They're just afraid that users will realize that stablecoins can generate interest.

Earning yields on the chain vs. bank deposits—once this comparison comes out, it's game over.

The Blockchain Association's statement is not wrong, but they underestimated the lobbying power of traditional finance.

Another battle of interests, with the stakes being trillions of dollars flowing in.

The real game has just begun, and the loopholes in the GENIUS Act will only grow larger.

GateUser-cff9c776 · Answer

The tug-of-war between the classic old power and new power supply and demand curves. Banks are not afraid of stablecoins themselves; they fear losing pricing authority.

Traditional finance still aims for monopoly, but Web3 has already begun rewriting the rules of the game. The loopholes in the GENIUS Act are essentially inevitable cracks in system evolution.

In the face of trillions of dollars in attraction, regulatory loopholes cannot be blocked at all unless they can prove that stablecoins are more profitable than bank certificates of deposit.

It's quite funny on the bank's side. The Federal Reserve's reserves are just sitting there, and then they say stablecoins will drain deposits. That logic is self-contradictory.

The real issue isn't whether stablecoins can make money; it's who has the authority to decide where the money flows. That is the core.

Honestly, this bickering more accurately reflects the fundamental divide between traditional and decentralized systems than the market itself.

Rather than hiding within regulatory frameworks, it's better to think about how to coexist with Web3. But for banks, this might be even more difficult than innovating.

I heard similar arguments last year. Every time, they say they want to crush competition. But what happened? The ecosystem is still growing, just with different methods.

This will sooner or later shift from "can we do it" to "how to regulate it." The current conflicts are just the growing pains of the transitional period.

DisillusiionOracle · Answer

Here we go again, the banks are afraid of being overthrown. No matter how nicely they put it, it's still about this.

GmGmNoGn · Answer

What are banks afraid of? They're just afraid of not making money. When stablecoins give returns to the holders and then run away, it's like they’ve moved the cheese for them.

Looking at it from another perspective, with the Federal Reserve holding so much reserve, why are banks so anxious?

Ha, in the end, it's still a game of power. The losers will always be ordinary people.

The truth is, if stablecoins really become widespread, the banking system will have to reform.

When will the GENIUS Act finally be truly smart?

Just wait and see, this show has only just begun.

The Battle After the GENIUS Act: Banks vs. Blockchain, Who Will Prevail?

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