Banking Groups Call for Clear Stablecoin Rules Under GENIUS Act

A coalition of banking associations has submitted recommendations to the Treasury on implementing the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, calling for regulations that protect consumers and financial stability while preserving the benefits of stablecoins for payments.

The submission was led by the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum and The Clearing House Association.

It urges the Treasury to ensure that stablecoin regulations reflect Congress’s intent while preventing risks related to consumer protection, credit availability, illicit finance, competition, and overall financial stability.

In the letter, the associations said:  “The associations believe that it will be critical that the Treasury Department and applicable regulators craft regulations under the GENIUS Act that preserve the benefits of payment stablecoins for their intended use in payments and settlements, without causing undue and unnecessary risks for consumers, other stablecoin holders or users, competition, credit availability, illicit finance or financial stability.”

Among the recommendations, the associations emphasize that stablecoins should not pay interest or yield. They also recommend extending this prohibition to digital asset service providers such as exchanges and affiliates.

In addition, they call for measures to prevent regulatory arbitrage, ensuring that stablecoin issuers are subject to the same rules as other financial institutions performing equivalent activities, both domestically and internationally.

Other key recommendations include enforcing strict anti-illicit finance safeguards, maintaining the separation of banking and commerce, and ensuring that stablecoin issuers provide clear disclosures on reserves and uphold rigorous custody standards to foster trust and avoid conflicts of interest.

The letter also highlights the importance of consistent consumer protections and urges Treasury to clarify statutory definitions, including terms such as “payment stablecoin,” “digital asset service provider,”  and “foreign payment stablecoin issuer,”  to create a common regulatory framework and reduce opportunities for evasion.