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Coinbase Institute has criticized banking groups for asking regulators to prevent merchant rewards for stablecoin customers, arguing the request has no merit under the GENIUS Act.
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Crypto exchange Coinbase has slammed US banking groups for asking regulators to ban merchant rewards, cashbacks and discounts offered to customers who pay with stablecoins, calling the request “unamerican.”
The clash relates to the statutory language of the GENIUS Act, which prohibits stablecoin issuers from offering interest or yield to holders of the token, but it does not explicitly extend the ban to crypto exchanges or affiliated businesses.
The banking groups claim an “indirect interest” arises when a third-party financially benefits and has a connection to the stablecoin issuer. Coinbase chief policy officer Faryar Shirzad, however, strongly opposed that view in a post to X on Thursday and called on regulators to “stick to the statutory text.”
“There is something unamerican about bank lobbyists pressing regulators to tell stablecoin customers what they can and cannot do with their own money after it is issued.”
The banking groups are seemingly concerned that widespread adoption of yield-bearing stablecoins could undermine the banking system, which relies on banks attracting deposits with high-interest savings products to back the loans they make.
Stablecoins expected to draw blood from banking
Widespread stablecoin adoption could result in more than $6.6 trillion in deposit outflows from the traditional banking system, according to an estimate by the US Treasury Department in April.
This article first appeared at Cointelegraph.com News
