Group 1 - The US banking industry is advocating for a prohibition on companies paying interest on stablecoin balances, which is causing delays in the legislative process for the Clarity Act in Congress [1][2][4] - A meeting hosted by the White House's crypto council included representatives from major banks and crypto trade associations, highlighting the industry's unified stance against interest payments on stablecoins [3] - The document shared among banks emphasizes limited exemptions to the prohibition and warns that allowing interest payments could lead to deposit flight, negatively impacting local lending [6][7] Group 2 - The American Bankers Association and other banking organizations issued a joint statement advocating for policies that support financial innovation while ensuring the safety of bank deposits [8]

I’ve been watching Tether and Circle celebrate Washington’s new stablecoin rulebook, and then I saw New York’s top prosecutors try to rip the shine off it. In a warning that’s now circulating through policy circles, they argue the law that was supposed to “de-risk” dollar tokens may also make it easier for issuers to sit on disputed funds, and even earn on them, while victims fight to get paid back. Related: Largest crypto exchange announces surprising plan after Bitcoin crashes GENIUS Act stablecoin fr ...

The Hong Kong Money Authority (HKMA) plans to issue its first Stablecoin Issuer Licenses in March. According to a report from Reuters, HKMA chief executive Eddie Yue told members at a meeting of the legislative council on Feb. 2 that the central bank expected to issue a “very small number” of licenses in March, though no specific date or further information regarding the potential licensees was given. The HKMA had previously revealed that it received 36 completed applications for Stablecoin Issuer Licen ...

Core Insights - The U.S. is evaluating whether stablecoins should remain as payment tools or evolve into deposit-like products, posing a threat to traditional banking [1][6][24] - Banks are advocating for strict regulations on stablecoins to prevent them from offering features that make them more appealing than traditional bank accounts, particularly regarding rewards [2][6] - The White House is facilitating discussions between banks and crypto firms to address the legislative deadlock surrounding stablecoin regulations [3][4] Industry Dynamics - Stablecoins are increasingly being integrated into mainstream payment systems, with major firms like Visa and Stripe developing stablecoin settlement capabilities [4][17] - Standard Chartered estimates that stablecoins could siphon up to $500 billion from U.S. bank deposits by 2028, significantly impacting regional banks [6][7] - The rapid movement of funds into stablecoins raises concerns about liquidity and the potential for a "bank run" scenario, where users can quickly convert deposits into stablecoins [10][11] Regulatory Landscape - The U.S. is lagging behind other jurisdictions in establishing clear regulations for stablecoins, which could lead to a shift of activities to regions with more favorable frameworks [19][20] - Global regulatory bodies are advocating for consistent oversight of stablecoin arrangements due to their potential financial stability risks [23] - The debate centers around who controls the economic benefits of digital dollars, with banks seeking to maintain their traditional roles in the financial system [21][22] Market Trends - Stablecoins are processing significant volumes in on-chain settlements, with a reported $33 trillion processed recently, indicating their growing role in financial transactions [13] - USDC is gaining traction over USDT in transaction volume, suggesting a shift towards institutional and B2B uses rather than just retail trading [14] - The integration of stablecoins into payment systems is transforming them from a niche crypto product into essential financial infrastructure [18][24]

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Bitcoin‘s (CRYPTO: BTC) underperformance against gold continues to spur debate among crypto commentators. Why Bitcoin Looks Cheap Against Gold Satsuma’s Chief Bitcoin Strategist Mark Moss says Bitcoin looks "cheap" in gold terms, noting BTC tends to revisit its 200-week moving average against gold roughly every four years, historically a strong long-term accumulation zone. While downside risk remains in th ...

Japan’s Financial Services Agency has unveiled strict collateral requirements for stablecoin reserve assets, setting a remarkably high threshold that could limit which bonds qualify as backing for digital yen instruments. The proposed rules mandate that foreign-issued bonds must carry top-tier credit ratings and come from issuers with at least 100 trillion yen ($650 billion) in outstanding debt, a bar few global entities can meet. The draft standards emerged Monday as part of regulatory notices implemen ...

Core Viewpoint - Bank of America CEO Brian Moynihan expressed that while the bank can adapt to the rise of stablecoins, there are significant concerns regarding the potential movement of up to $6 trillion in deposits into stablecoins, which could negatively impact the broader banking system by reducing lending capacity and increasing borrowing costs [1][6][7] Group 1: Stablecoins and Banking System Impact - Moynihan highlighted that the shift of deposits into stablecoins could lead to a reduction in banks' lending capacity, as deposits are essential for funding loans [7] - The American Bankers Association (ABA) has echoed these concerns, urging lawmakers to address "dangerous loopholes" in stablecoin legislation that allow issuers to offer yield-like incentives, potentially diverting savings from traditional banks [5] - The GENIUS Act, aimed at establishing a federal framework for stablecoin issuers, has faced criticism from banks for not including stronger regulations to prevent stablecoins from acting as interest-bearing deposit substitutes [4] Group 2: Legislative Context and Industry Reactions - RBC Capital Markets analyst Gerard Cassidy raised questions about whether U.S. lawmakers would address a "looming loophole" that could allow stablecoin deposits to pay interest, which is currently restricted [3] - The Senate has been debating provisions to adjust this loophole in a crypto market structure bill, but progress has stalled following Coinbase's withdrawal of support [3] - There is a divide in the banking sector regarding the risks posed by stablecoins, with some institutions, like JPMorgan, downplaying the systemic risk associated with stablecoins drawing savings onto blockchains for higher yields [8]

Core Viewpoint - Community bank leaders are urging U.S. senators to address loopholes in stablecoin legislation, warning that trillions of dollars could leave traditional bank deposits, negatively impacting local lending [1][2][4] Group 1: Concerns from Community Bankers - The American Bankers Association's Community Bankers Council expressed concerns that stablecoin issuers are finding ways to offer yield-like incentives, which could divert savings from banks that rely on deposits for loans [2][4] - The ABA estimates that up to $6.6 trillion in bank deposits could be at risk if stablecoin practices continue, potentially harming small businesses and local economies [3][4] - The letter highlights that while the GENIUS Act introduced oversight for stablecoins, it does not fully prevent issuers from indirectly compensating users, which undermines the intent of the legislation [4] Group 2: JPMorgan's Perspective - JPMorgan has a different view, downplaying the systemic risk posed by stablecoins drawing savings onto blockchains for higher yields [5][6] - A JPMorgan spokesperson noted that the presence of various forms of money, including stablecoins, will coexist and serve complementary roles in the financial ecosystem [6] Group 3: Ongoing Industry Debate - The letter from community bankers is part of a long-standing effort by U.S. banking groups to limit the issuance of dollar-backed stablecoins, which are increasingly popular in the crypto economy [6][7] - Previous attempts by bank trade groups have included calls to restrict stablecoin issuance to regulated banks or to ban interest-bearing tokens altogether [7]

Core Insights - US lawmakers are considering changes to the GENIUS Act, influenced by banking groups urging Congress to restrict third-party rewards on stablecoins, amidst a stablecoin supply surpassing $316 billion, indicating significant reliance on dollar-pegged tokens for transactions and savings [1][2] Group 1: GENIUS Act Overview - The GENIUS Act establishes foundational regulations for stablecoins, requiring issuers to maintain real dollar reserves and adhere to strict oversight, functioning similarly to cash in a digital format without intermediary banks [3] - The act prohibits issuers from directly paying interest, although crypto platforms can still incentivize users through trading fees or lending returns, which banks are now seeking to limit [4] Group 2: Industry Reactions - Industry representatives argue that banks are motivated by competitive fears rather than genuine risks, emphasizing that the legislation aims to balance safety with innovation [5] - The Blockchain Association supports this perspective, asserting that there is no evidence to suggest that stablecoins undermine banks, and that rewards primarily benefit everyday users rather than large financial institutions [6] Group 3: Potential Implications - If Congress aligns with banking interests, stablecoins may become less attractive, resembling traditional checking accounts without the benefits, which could hinder adoption and negatively impact DeFi applications that depend on stablecoin liquidity [7]

Core Viewpoint - World Liberty Financial, co-founded by President Donald Trump, is applying for a national trust bank charter to expand its USD1 stablecoin operations [1][2]. Group 1: Company Developments - WLTC Holdings LLC has submitted a de novo application to the Office of the Comptroller of the Currency for establishing World Liberty Trust, a national trust bank focused on stablecoin services [2]. - World Liberty has raised funds through the sale of its WLFI token, which transitioned from a non-transferable governance token to a tradable asset [4]. - The USD1 stablecoin has a market capitalization of $3.4 billion, and if the charter is granted, it will enable World Liberty Trust to serve institutional clients and offer digital asset custody and stablecoin conversion services [4]. Group 2: Industry Context - The application for a bank charter by World Liberty is part of a broader trend among crypto firms seeking federal legitimacy while avoiding full regulatory obligations of national banks [3]. - Other crypto firms, including Coinbase, Ripple, Paxos, and BitGo, have also pursued bank charters, indicating a growing interest in regulatory frameworks for digital assets [3]. - The national trust charter aims to provide a federal framework for custody, reserve management, and fiduciary oversight, potentially enhancing institutional participation and consumer protections in the crypto space [5].