The post Community Banks Want GENIUS Act Yield ‘Loophole’ Closed appeared on BitcoinEthereumNews.com.

A group of US community bankers is pressuring Congress to change the GENIUS Act to close a supposed “loophole” that allows yield-generating stablecoins to undercut banks. The American Bankers Association’s Community Bankers Council said in a letter on Monday to the Senate that it must tighten the stablecoin regulatory bill passed last year to stop stablecoin issuers from offering yield to tokenholders through third parties. “Some companies have exploited a perceived loophole allowing stablecoin issuers to indirectly fund payments to stablecoin holders through digital asset exchanges and other partners,” the group of more than 200 community bank leaders said. The GENIUS Act banned stablecoin issuers from offering interest or yield to holders, with lawmakers agreeing with the bank lobby that it could put such tokens in competition with bank savings accounts. However, exchanges such as Coinbase and Kraken offer rewards to those who hold certain stablecoins on their platform, with the Community Bankers Council arguing that closing the loophole was crucial as it impacts its banks’ lending abilities. “With this activity, the exception swallows the rule,” the group said. “If billions are displaced from community bank lending, small businesses, farmers, students, and home buyers in towns like ours will suffer.” Source: American Bankers Association The council argued that exchanges and a “constellation of stablecoin-affiliated companies are not designed to fill the lending gap” and couldn’t offer products insured by regulators. It asked lawmakers to put a prohibition on affiliates and partners of stablecoin issuers offering interest in crypto market structure legislation that is currently making its way through Congress. Banks push for GENIUS Act changes The council’s letter is the latest push by a bank advocacy group to amend the GENIUS Act, with the Banking Policy Institute leading a cohort of groups that are pressuring lawmakers to take action. Related:…

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Filed under: News - @ January 7, 2026 8:28 am