Last month the Senate published a discussion draft for crypto market infrastructure legislation, the Responsible Financial Innovation Act (RFI Act). Despite providing a short comment window of less than two weeks for feedback, the Senate has clearly been inundated with input. Links to several high profile responses are provided below, ranging from bank associations and bank regulators to securities regulators and web3 groups.
Banking associations are concerned about the offer of interest on stablecoins. While the recently passed GENIUS Act for stablecoins does not allow the payment of interest by stablecoin issuers, it doesn’t prevent crypto exchanges from making similar payments. This contrasts with Europe’s MiCA regulations, which bars both. The American Bankers Association, the Bank Policy Institute and others want a clause in the new infrastructure bill to prevent the payment of interest by others.
Coinbase was formerly the joint issuer of the USDC stablecoin. As part of ending its joint issuance role, Coinbase receives significant interest on the underlying reserves for USDC coins held by its customers. Clients can earn 4.1% in “rewards” for holding USDC. The associations argue that this undermines the prohibition of interest intended in the GENIUS Act. On the one hand, it’s likely that this issue was already heavily debated before the passage of the GENIUS Act. On the other hand, an exchange interest prohibition sits better in the infrastructure bill. But its current absence doesn’t bode well for the banking associations’ desires.
Banking concerns beyond interest
State banking associations also raised concerns about interest. But they have an even bigger worry.
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