Blockchain Association Opposes Expansion of Stablecoin Yield Prohibition
The Blockchain Association, a nonprofit crypto advocacy organization, has written a letter to the U.S. Senate Banking Committee, signed by over 125 crypto industry groups and companies, opposing the ban on third-party providers and platforms that offer customer rewards for stablecoin holders. This move is seen as a pushback against efforts to stifle innovation in the crypto space.
According to the letter, extending the GENIUS regulatory framework for stablecoins’ ban on stablecoin issuers from sharing revenues directly with customers to third-party service providers would lead to “greater market concentration.” The letter compares the rewards offered by crypto platforms to those offered by credit card companies, banks, and other traditional payment providers. 
The letter rejects efforts to prevent crypto platforms from sharing revenue with customers. Source: The Blockchain Association
The Blockchain Association argues that banning crypto platforms from offering similar rewards for stablecoins gives established financial services providers an unfair advantage. “The potential benefits of payment stablecoins will not be realized if these payment types cannot compete on a level playing field with other payment mechanisms. Rewards and incentives are a standard feature of competitive markets.” The association has issued several statements and letters pushing back against efforts to ban crypto platforms from sharing high-yield opportunities with customers, arguing that these rewards help consumers offset inflation.
FDIC Proposal Allows Banks to Issue Stablecoins
The Federal Deposit Insurance Corporation (FDIC), the U.S. regulator that oversees and insures the banking sector, has released a proposal that would allow banks to issue stablecoins through subsidiaries. Under the proposal, both the bank and its stablecoin subsidiary would be subject to FDIC rules and assessments regarding their financial performance, including reserve requirements. 
The FDIC proposal to allow banks to issue stablecoins. Source: FDIC
The Blockchain Association continues to push back against claims that yield-producing stablecoins and the sharing of rewards with customers threaten the banking sector and bank lending. “Evidence does not support the claim that stablecoin rewards threaten community banks or lending capacity,” the Blockchain Association said, adding that it is difficult to make the claim that bank lending is actually constrained by customer deposits. However, the banking industry has pushed back against high-yield stablecoins and crypto platforms that share earnings with customers, fearing that interest rates on digital asset products would erode banks’ market share.
Industry Reactions and Implications
The debate surrounding stablecoin yields and rewards has sparked a wider discussion about the role of crypto in the financial system. As the crypto industry continues to evolve, it is likely that regulatory frameworks will adapt to address concerns around innovation, competition, and consumer protection. For more information on this topic, visit https://cointelegraph.com/news/blockchain-association-no-expanding-stablecoin-yield-prohibition?utm_source=rss_feed&utm_medium=rss_tag_blockchain&utm_campaign=rss_partner_inbound
