The Blockchain Association’s Opposition to Stablecoin Restrictions
The Blockchain Association, a prominent advocate for cryptocurrency interests, has actively opposed an expansion of restrictions regarding customer rewards for stablecoin holdings. In a united front, the organization, along with over 125 other firms in the crypto sector, submitted a letter to the Senate Committee on Banking, which criticized a proposal that would extend a ban on stablecoin issuers sharing yield to include third-party services.
Concerns Over Innovation and Market Consolidation
This proposal, part of a broader regulatory framework called GENIUS, is seen by the Blockchain Association as a hindrance to innovation, warning that it could lead to increased market consolidation.
The letter drew parallels between the rewards provided by crypto platforms and those typically offered by traditional financial institutions such as banks and credit card companies. The Association argued that restricting similar rewards in the crypto space gives an undue advantage to established financial services while limiting competition.
“For payment stablecoins to fully realize their potential benefits, they must be allowed to compete equitably with other payment systems, which traditionally offer rewards and incentives,” the letter stated.
Importance of Yield-Generating Stablecoin Products
This is not the first time the Blockchain Association has voiced concerns over restrictions on yield-generating stablecoin products. They argue that these rewards are vital for consumers, helping them mitigate inflationary pressures.
FDIC’s Proposed Framework for Stablecoin Issuance
In a related development, the Federal Deposit Insurance Corporation (FDIC) has proposed a framework that would permit banks to issue stablecoins via their subsidiaries. This plan dictates that both the issuing bank and its stablecoin unit must adhere to FDIC guidelines and reserve regulations.
Despite assertions from the Blockchain Association that evidence does not substantiate fears that stablecoin offerings threaten community banks or affect lending capabilities, the banking industry has expressed concern. They have lobbied against offerings of yield-bearing stablecoins, worrying that the allure of higher interest rates on digital assets could dilute their market share in traditional banking.
