Stablecoin yield battle escalates: Banks vs Crypto, GENIUS Act rewrite imminent

2026-01-10 02:03:46

The two parties in the Senate are pushing forward with adjustments to the GENIUS Act, with the rules on stablecoin yields becoming the core point of disagreement. According to the latest news, two adjustment paths are currently competing: one is to limit yields only during trading, and the other is to require that only institutions with OCC banking licenses can offer yields. The CLARITY Act will also begin deliberation next week, signaling that the final framework for US stablecoin regulation is about to be finalized.

The Interests Behind the Two Adjustment Paths

Sources reveal that bipartisan senators are gradually accepting the demands of the banking lobby, mainly concerning two proposed adjustments:

Adjustment Path	Core Content	Supporters	Impact Assessment
Path 1	Limit yields to trading only	Democrats more supportive	Restricts DeFi yields, protects bank deposit business
Path 2	Only OCC-licensed institutions can provide yields	Considered more crypto-friendly	Raises thresholds but controversial in DeFi

While these paths seem moderate, they actually reflect a fundamental opposition between the banking industry and the crypto sector. Banks believe stablecoin yields threaten their core deposit business, while the crypto industry fears excessive restrictions could stifle innovation.

The Real Demands of the Banking Industry

In a letter issued on January 5, the American Bankers Association called for a complete ban on stablecoin yields. Their logic is: platforms like Coinbase currently offer 3.35% yields on USDC, directly competing with bank deposit rates. If stablecoins become more attractive assets, users might shift from banks to crypto platforms, threatening the banks’ deposit base.

Crypto Industry’s Counterattack

Crypto executives, including Mike Novogratz and others, strongly oppose these modifications. Their core argument is: restricting stablecoin yields will not only stifle innovation but could also harm the US’s global competitiveness. More radical voices even suggest that such policies might push users toward foreign options like China’s digital yuan, constituting a “national security trap.”

Paradigm’s Vice President of Government Affairs, Alex Grieve, offers a deeper analysis: stablecoins are essentially akin to debit card products, not credit cards. Forcing the regulatory framework of credit cards onto stablecoins is itself a “Washington-style mistake.”

Market Landscape Is Reshaping

The current state of the stablecoin market speaks volumes. According to the latest data:

Stablecoin market cap exceeds $300 billion, with annual trading volume surpassing $27 trillion
USDC, benefiting from its compliant structure, regains a 25% market share, with an annual growth rate of 73%
On-chain annual transfer volume exceeds $35 trillion, indicating stablecoins are evolving from “transaction media” to “payment infrastructure”

The core logic behind this shift is “trust standardization.” Once the GENIUS Act’s regulatory framework is established, trust will no longer be based on brand narratives but on compliance adherence. This benefits compliant assets like Coinbase and USDC but poses a threat to platforms that rely on yields to attract users.

The Attitude of Payment Giants Is Key

It’s worth noting that Visa has already listed stablecoins as a “trusted settlement layer” in its annual payment outlook, explicitly citing the clarity brought by the GENIUS Act. As a giant supporting over 130 stablecoin cards across more than 40 countries, Visa’s endorsement almost acts as a vote of confidence in the prospects of compliant stablecoins.

Legislation Timeline: Next Week Is a Critical Point

According to the latest information, the schedule is now clear:

Tonight (January 10): Scott is expected to submit the House version of the CLARITY Act as a placeholder text
Before midnight on Monday (January 13): the official text must be submitted
January 15: Senate Banking Committee begins review

Industry insiders say that previous remarks about “praying for the bill to pass” were more of a lighthearted joke than a pessimistic view of the legislative prospects. This indicates that the market generally views the bill’s passage as likely.

Summary

The adjustment of stablecoin yield rules is essentially a power struggle between traditional finance and the crypto industry over the future of US finance. Both paths aim to balance interests, but the final outcome depends on next week’s Senate review.

The impact on the market is clear: regardless of which path is chosen, it will accelerate the compliance and institutionalization of the stablecoin market. For ordinary users, this might mean lower yields but increased asset security. For the entire industry, it’s a necessary step toward mainstream financial integration.

A key point to watch is that the current controversy—stablecoin yields—though seemingly technical, actually reflects a deeper issue: who will define the financial infrastructure of the 21st century? The outcome of this battle will largely determine the future landscape of the stablecoin ecosystem over the coming years.

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