Senate Crypto Bill Faces Delay as Banks Flag Reward Loopholes Threatening Loans and Small Business Credit
Bank groups have strongly opposed the latest stablecoin rewards plan in the Senate crypto bill. They said the draft does not do enough to protect banks and their deposits. This has created new tension around crypto regulation in the United States.
The proposal tries to set clear rules for stablecoins. It prevents companies from offering direct interest, as banks do. But it still allows rewards based on user activity. This includes payments, transactions, and token holdings. Lawmakers and crypto firms said this solution works. However, bank groups said the problem still exists.
Banks Raise Concerns Over Rewards
Banks believe the plan leaves open gaps. They said crypto platforms can design reward systems that feel like interest. This could make stablecoins similar to savings accounts. Banks see this as a serious concern.
The main issue is deposit risks. Banks fear that people may move their money from bank accounts into stablecoins. If that happens, banks may have less money to lend. This can affect loans for homes, small businesses, and farmers.
Fear of Deposit Shift and Loopholes
Bank groups also pointed to a key loophole. The plan allows exchanges to offer rewards through programs linked to usage or membership. These rewards may depend on how long funds stay or how much balance is held. Banks said this looks very close to earning interest.
Crypto companies have supported the current plan. They said stablecoin rewards are important for growth. They believe rewards help people use digital payments more often. They also want faster progress on the Senate crypto bill.
Divide Between Banks and Crypto Firms
This has created a clear divide. Banks want strict rules to protect deposits. Crypto firms want flexible rules to support innovation. Lawmakers now face pressure to fix the draft.
The Senate crypto bill has already faced delays earlier this year. This new disagreement may slow it down again. There is also time pressure. If the bill does not pass soon, it may lose momentum before the upcoming elections.
Bank groups plan to send detailed suggestions to lawmakers. They want to close all gaps in the proposal. Their goal is simple. They want to stop stablecoins from acting like bank accounts.
This issue shows a bigger challenge in finance. Banks focus on safety and stability. Crypto firms focus on growth and new ideas. The final decision on crypto regulation will shape the future of stablecoins.
