Banking Groups Push for Changes in U.S. Stablecoin Law
- Banking groups lobby for GENIUS Act changes.
- Regulatory loopholes may affect market stability.
- Potential $6.6 trillion in deposit outflows.
U.S. banking groups advocate for changes to the GENIUS Act, aiming to close regulatory loopholes and ensure clearer oversight of stablecoin issuers, impacting consumer protection and market stability.
The banking groups’ demands highlight fears of regulatory arbitrage and potential market destabilization, influencing both traditional banks and stablecoin issuers in the rapidly evolving financial sector.
U.S. banking groups are lobbying Congress to amend the GENIUS Act, enacted in 2025, to address regulatory loopholes in stablecoin legislation.
This legislation could impact market stability and lead to significant deposit outflows, prompting urgent industry concerns.
Banking Groups Urge Amendments to GENIUS Act
The GENIUS Act, enacted in July 2025, addresses stablecoin regulation, but banking groups seek amendments. They argue the current Act introduces regulatory loopholes affecting market stability and customer protection.
Banks including Citigroup, along with organizations like the Bank Policy Institute, call for Congress to revise the GENIUS Act. They focus on loopholes regarding stablecoin yields and regulatory arbitrage.
Unresolved Loopholes Threaten $6.6 Trillion in Deposit Outflows
According to the Bank Policy Institute, unresolved loopholes could disrupt credit flows, leading to $6.6 trillion in deposit outflows. This poses a risk to both traditional banking and emerging crypto markets.
Greg Baer, President and CEO of the Bank Policy Institute, stated:
“Failure to close the so-called loophole in the new stablecoin laws under the GENIUS Act may disrupt the flow of credit to American businesses and families, potentially triggering $6.6 trillion in deposit outflows from the traditional banking system.”
Regulatory Shifts Echo Past Market Disruptions
Past regulatory shifts, such as those affecting Tether and Circle, illustrate how market confidence can be impacted. Similar concerns were seen during the Terra/UST collapse in 2022.
Analysts suggest closing these loopholes could prevent adverse outcomes similar to prior stablecoin instabilities, sustaining market confidence and ensuring a balanced regulatory environment.
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