The Loophole Turning Stablecoins Into a Trillion-Dollar Fight

The GENIUS Act, aimed at regulating stablecoins, has inadvertently created a loophole that has turned the industry into a trillion-dollar battleground. The Act barred stablecoin issuers from paying interest, but allowed cryptocurrency exchanges to offer rewards. This has led to a high-stakes clash between the crypto industry and the US banking sector. The banking industry argues that the rewards offered by crypto exchanges are effectively interest payments, and therefore should be subject to the same regulations as banks. Crypto companies, on the other hand, maintain that the rewards are distinct from traditional interest payments and should not be subject to the same restrictions. The outcome of this clash could have significant implications for the future of the stablecoin market, which has grown to over $1 trillion in value. The resolution of this issue will likely shape the regulatory landscape for the crypto industry and determine the extent to which stablecoins can continue to operate in their current form.