- All eyes remain fixed on Jan. 15 for the markup of the Digital Asset Market Structure Legislation; several outstanding issues, especially the case of stablecoin rewards codified in the GENIUS Act, could stand in the way of a seamless review next week.
GENIUS Stablecoin Yield Poses As Major Difference Ahead Of Market Structure Markup
In July 2025, the US Congress decisively resolved the critical regulatory question of how stablecoin yields should be administered to ensure equity among major financial players in the US. However, big banks and Democrats are now revisiting the settled provisions.
While Democrats and their Wall Street lobbies push for the total removal of all stablecoin yield provisions, citing some perceived negative implications on traditional finance and average US account holders, the crypto industry, alongside Republicans, warns that adhering to Wall Street’s demand could significantly offer digital asset dominance to America’s competitors on a platter.
China’s central bank recently confirmed its approval of yields for holders of its state-owned CBDC (Central Bank Digital Currency), raising new concerns about how this move could secure it an edge over US payment systems.
Wall Street, in several lobbying moves, has warned that stablecoin rewards could lead to capital flight from community banks. Meanwhile, crypto stakeholders like Coinbase’s Brian Armstrong insist that “rewards on stablecoins will not change lending one bit” but will significantly impact on whether U.S. stablecoins are competitive.
“Rewards (or even paying interest) benefits ordinary people just like community lending does. We have to let the market do both,” added Armstrong, who has been very vocal about the positives of allowing the yield provisions on GENIUS.
Banks Target Stablecoin Rewards to Shield Lucrative, Longstanding Revenue Models
Ethereum Co-Founder Joseph Lubin has stressed the need for policymakers to prioritise consumer interests, innovation, and U.S. competitiveness amid the ongoing debates surrounding stablecoin yields.
“Given the news that the Senate Banking committee will vote next week on market structure, let’s remember that stablecoins allow anyone, anywhere to access U.S. dollars with just an internet connection,” stated Lubin.
“We shouldn’t undercut this world-changing innovation by restricting consumer freedom to put their money to work. The GENIUS Act was careful not to do that.”
Contrary to Wall Street’s claims, independent research from Cornell University shows that stablecoin adoption does not militate against bank lending. Coinbase Chief Policy Officer Faryar Shirzad stated that “rewards would need to approach 6% to meaningfully affect deposits” and “no one is offering anything close to that.”
According to a detailed analysis, Shirzad revealed that big banks earn over $178 billion annually on Federal Reserve Deposits, alongside $187 billion from card swipe fees (roughly $1,440 per household). The Coinbase executive said stablecoin yields create genuine competition in payments, threatening bank margins and prompting banks to push for a ban on rewards.
Crypto advocates expect swift action on the outstanding components of the market structure bill before the end of this week or early next week, so as to set the stage for a smooth markup on Thursday next week.
