The Blockchain Association, a nonprofit cryptocurrency advocacy group, sent a letter to the U.S. Senate Banking Committee opposing a ban on third-party service providers and platforms that offer customer rewards to stablecoin holders, and was signed by more than 125 cryptocurrency industry associations and companies.
Extending the prohibition on stablecoin issuers from directly sharing yields with customers to third-party service providers, as outlined in the GENIUS stablecoin regulatory framework, would stifle innovation and lead to “further market concentration,” the letter said.
The letter compared the rewards offered by cryptocurrency platforms to those offered by credit card companies, banks, and other traditional payment providers.
The letter opposes efforts to prevent crypto platforms from sharing revenue with their customers. sauce: blockchain association
Banning crypto platforms from offering rewards similar to stablecoins would give an unfair advantage to incumbent financial service providers, the Blockchain Association said.
“The potential benefits of payment stablecoins will not be realized unless these types of payments can compete on a level playing field with other payment mechanisms. Rewards and incentives are standard features of competitive markets.”
The Blockchain Association has released multiple statements and letters opposing efforts to prohibit crypto platforms from sharing revenue-generating opportunities with their customers, arguing that these rewards help consumers offset inflation.
Related: Bank of Canada presents standards for ‘good money’ stablecoinss
FDIC clears the way for banks to issue stablecoins, industry group says stablecoins are not a threat
The Federal Deposit Insurance Corporation (FDIC), the US regulator that oversees and provides insurance for the banking sector, announced on Tuesday a proposal that would allow banks to issue stablecoins through their subsidiaries.
Under the proposal, both banks and their stablecoin subsidiaries would be subject to FDIC rules and financial suitability assessments, including reserve requirements.
FDIC proposal to allow banks to issue stablecoins. sauce: F.D.I.C.
The Blockchain Association continues to push back against claims that high-yield stablecoins and reward sharing with customers threaten the banking sector and bank lending.
“Claims that stablecoin rewards threaten community banks and their ability to lend are not supported by evidence,” the Blockchain Association said, adding that it is difficult to argue that bank lending is actually constrained by customer deposits.
Nevertheless, the banking industry is lobbying against high-yielding stablecoins and crypto platforms that share yields with customers over concerns that the interest rates offered on digital asset products will eat into banks’ market share.
magazine: Unstable coin: Depegging, attaching and other risks loom
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