In a strategic move, U.S. banking groups are urging regulators to postpone components of the GENIUS Act’s federal implementation, marking another phase in their ongoing battle over the expansion of stablecoins into traditional bank deposit territories.
On April 22, the American Bankers Association (ABA) and three other industry trade organizations requested that the Treasury Department and the Federal Deposit Insurance Corp. push back the public comment deadlines for three proposed regulations under the GENIUS Act until 60 days after the Office of the Comptroller of the Currency finalizes its regulatory framework.
This procedural appeal could delay the activation of the federal stablecoin legislation by several months.
The Treasury’s initial GENIUS rule aims to tighten federal control over large stablecoin issuers while leaving states with limited authority. Meanwhile, as traditional banks lobby Senate lawmakers to restrict stablecoin rewards under the Digital Asset Market Clarity Act (CLARITY), they are engaging in a dual-front effort to limit the digital asset sector.
Banks argue that allowing stablecoins to serve as yield-bearing alternatives threatens their deposit-funded lending models, potentially redirecting capital away from traditional deposits. They contend that delaying the GENIUS rules will provide time to address these concerns.
The banking associations claim that three federal proposals are closely linked to the OCC’s primary rule and suggest a unified comment period would enhance regulatory consistency. The proposed regulations include assessments of state versus federal regulatory standards, requirements for regulated issuers, and compliance with anti-money laundering measures.
A delay in implementing these rules effectively postpones the rollout of regulated nonbank stablecoin infrastructure. Concurrently, banks are lobbying to eliminate provisions that allow third-party platforms to offer yields on stablecoins within the CLARITY Act.
The ABA has launched a public relations campaign, including advertising in Washington publications, warning lawmakers about the potential impact on local lending markets. However, a White House Council of Economic Advisers report suggests such a ban would minimally increase traditional bank lending and cost consumers significantly.
While crypto firms argue over current utility, banks focus on future market displacement risks. The stablecoin yield debate is also stalling the CLARITY Act’s progress in the Senate Banking Committee, with ongoing negotiations yet to produce finalized text.
With an election year nearing, delays risk missing legislative deadlines, and Senator Cynthia Lummis warns of potential postponements until 2030 if the bill isn’t passed this year. The banking industry aims to shape digital asset market structures before they become entrenched by delaying GENIUS rulemaking and lobbying against yield provisions in CLARITY.
Ultimately, banks seek to ensure stablecoins are used solely as payment rails, protecting their traditional lending models from decentralized competition.