US Stablecoin Yield Ban Could Prompt Other Markets to Fill the Void

The US Congress is advancing digital-asset market structure legislation that would clarify the division of regulatory authority between the Securities and Exchange Commission and the Commodity Futures Trading Commission. The dispute extends to the GENIUS Act, signed on July 18, 2025. Although the law bars issuers from paying interest, exchanges may be able to circumvent the restriction by offering rewards, potentially affecting bank deposits and local lending.

Senate Banking Committee Chairman Tim Scott scheduled a review of the bill for January 15, 2026. On January 12, the American Bankers Association and seven other banking and credit union groups jointly lobbied for a comprehensive ban on stablecoin yields and rewards. Their letter cited a US Treasury estimate that as much as $6.6 trillion in deposits could leave the banking system.

The GENIUS Act, passed by the United States in 2025, bars stablecoin issuers from paying yield directly but does not fully cover third parties such as exchanges. Banks argue that deposit-like rewards could drain bank deposits and constrain lending capacity. The crypto industry, meanwhile, views yield as an important tool for attracting users, making the provision a key sticking point in stalled market structure legislation.

A draft that emerged on March 25, 2026, was developed by Republican Senator Thom Tillis, Democratic Senator Angela Alsobrooks and the White House. It includes about five pages of exemptions and does not define “staking.” Four people familiar with the matter said banks fear exchanges could circumvent the ban through subscription plans or transfers between accounts. Coinbase has also said it cannot support the draft for now, which has not been incorporated into any bill.