Core Viewpoint - A coalition of US community bankers is urging Congress to amend the GENIUS Act to close a loophole that allows yield-generating stablecoins to compete with traditional bank deposits [1][9]. Group 1: Legislative Concerns - The Community Bankers Council of the American Bankers Association has called for tighter restrictions in the stablecoin framework passed last year [3]. - The council argues that the bill should be clarified to prevent stablecoin issuers from indirectly offering yield to tokenholders through third parties [3][4]. Group 2: Impact on Traditional Banking - The GENIUS Act prohibits stablecoin issuers from paying interest or yield, reflecting concerns that yield-bearing tokens could divert funds from insured bank savings accounts [5]. - Community bankers believe that the intent of this provision is being undermined by crypto platforms offering rewards tied to stablecoin holdings [5][6]. - Major exchanges like Coinbase and Kraken provide incentives for users holding certain stablecoins, which could siphon deposits from local banks and weaken their lending capacity [6][7]. Group 3: Risks to Local Communities - The bankers warn that large-scale deposit outflows could reduce credit availability for small businesses, farmers, students, and homebuyers in local communities [7]. - The council emphasizes that exchanges and affiliated crypto firms are not equipped to replace banks as lenders and do not offer federally insured products [7]. Group 4: Call to Action - The council is asking lawmakers to extend the GENIUS Act's yield ban to affiliates and partners of stablecoin issuers through pending crypto market structure legislation [8]. - This request adds to the growing pressure from banking groups, including the Banking Policy Institute, which has raised similar concerns about the potential outflow of trillions of dollars from the traditional banking system due to unchecked stablecoin incentives [8].