Multicoin Exec Says GENIUS Act Will End Banks’ ‘Rip-Off’ of Retail Depositors with Low Rates

Core Insights - The GENIUS Act is expected to instigate significant competition in retail banking, with technology companies likely to challenge traditional banks by offering stablecoin products that provide better yields and user experiences [1] - Major tech firms such as Meta, Google, and Apple are anticipated to utilize their extensive distribution networks to deliver stablecoins with enhanced returns, instant settlement, and free transfers integrated into popular applications [2] Banking Industry Response - The banking sector is actively lobbying against stablecoin platforms that could offer competitive yields, despite the GENIUS Act's restrictions being applicable only to issuers and not intermediaries [3] - Five prominent U.S. banking trade organizations have called on Congress to address perceived loopholes that enable crypto exchanges to provide stablecoin yields through affiliate programs, citing potential deposit outflows of $6.6 trillion as estimated by the Treasury [4] Historical Context and Concerns - Citigroup analyst Ronit Ghose has warned that stablecoin interest payments could lead to a deposit flight reminiscent of the 1980s, when money market funds grew from $4 billion to $235 billion in seven years, resulting in a $32 billion net withdrawal from traditional banks between 1981 and 1982 [5] - The American Bankers Association and the Bank Policy Institute have expressed concerns that joint marketing arrangements between issuers and exchanges could exacerbate deposit flight during financial stress, although major banks are simultaneously exploring stablecoin opportunities [6] Industry Developments - JPMorgan has introduced JPMD deposit tokens for institutional blockchain payments and has acted as the lead underwriter for Circle's IPO, indicating a growing interest in stablecoin initiatives [7] - Tushar Jain has dismissed banking concerns regarding interest payments to stablecoin holders, suggesting that existing prohibitions can be easily circumvented, as demonstrated by Coinbase's yield-sharing practices [7] - Stripe CEO Patrick Collison has echoed this sentiment, asserting that depositors should earn returns closer to market rates on their capital [7]