The regulatory battle over stablecoin rewards reignites in Washington

When it seemed that Congress had reached a consensus on stablecoins under the GENIUS Act, the Senate Banking Committee reopens one of the most controversial issues: whether issuers should be able to offer yields to their users. This decision, which will be voted on next week in the market structure bill, introduces new turbulence in a sector that believed it had achieved regulatory certainty.

The return of an old dispute

What makes this turn so significant is its timing. After Congress had already addressed this issue by establishing safeguards but allowing rewards in the GENIUS Act, reopening it at an advanced stage of the legislative process undermines the agreements reached. The Banking Committee must decide in the coming days whether to maintain, restrict, or clarify the provisions on stablecoin yields, while legislators still lack a unified stance.

This last-minute uncertainty amplifies the stakes. Depending on what the Senate decides, stablecoin issuers will face completely different rules on how they can compete in payments and blockchain commerce. It’s not a minor adjustment: it’s a redefinition of the entire commercial strategy of the sector.

The true center of the dispute: who dominates payments

Behind the discussion about rewards lies a deeper conflict over competition in payment systems. Industry advocates argue that this is not a matter of financial stability but of direct commercial rivalry.

From the industry’s perspective, stablecoins fundamentally compete with card infrastructures and traditional payment networks, not with bank deposits. Studies by Charles River Associates support this view: the analysis comparing the growth of USDC with bank deposits in community banks found no significant correlation between the two phenomena, suggesting they serve entirely different segments.

Research from Cornell University goes further: it not only confirms that stablecoins do not materially reduce bank loans but also demonstrates that current market reward rates are far from the thresholds needed to significantly impact deposits. The gap is enormous.

The real battle: bank income versus payment innovation

So why the resistance? Analysts identify the real incentive: U.S. banks generate significant income from payment-related services—card fees, transaction revenues, deposit margins. Stablecoin rewards pose a direct threat to this revenue source, especially as more commercial transactions migrate to blockchain.

From this perspective, legislative opposition is not about protecting consumers from systemic risks but about preserving bank margins. It’s regulatory protectionism disguised as prudential caution.

The geopolitical dimension no one mentions

The debate takes on additional dimensions when considering the international context. China is experimenting with features that generate interest in its digital yuan. Europe is advancing its own digital payment architectures. If the United States restricts the capabilities of its stablecoins—particularly the rewards that make these instruments more attractive—it risks ceding leadership in on-chain payment infrastructure.

It’s not just about crypto regulation. It’s monetary competition in the digital age, where the U.S. dollar needs to maintain its functional appeal in emerging payment systems.

What’s at stake this week

The Senate Banking Committee’s review will determine whether the bill maintains the structure outlined in the GENIUS Act or if legislative commitments collapse under last-minute pressure. Any redefinition of the rules on stablecoin rewards will have cascading effects: it will influence how these instruments compete, how they are valued by the market, and ultimately, how they are integrated into the U.S. financial system.

The deeper lesson is that, in the final stages of the legislative process, even topics that have been settled can be reopened. The fragility of regulatory commitments is exposed, leaving an entire industry awaiting decisions that could reverse months of achieved certainty.