Industry groups warn broader ban would hurt competition and limit consumer benefits
The Blockchain Association, joined by more than 125 crypto companies and industry organizations has urged US lawmakers to reject efforts to expand restrictions on stablecoin yield and rewards. In a letter sent to the Senate Banking Committee the group warned that extending the prohibition beyond issuers to include application-layer platforms would undermine competition and slow innovation in digital payments.
Opposition to Broader Yield Prohibition
At the center of the debate is a proposed regulatory framework that limits stablecoin issuers from directly sharing yield with users. The Blockchain Association argues that applying this restriction to third-party platforms such as wallets, exchanges, and payment apps goes too far.
According to the letter such an expansion would lead to greater market concentration by favoring large, incumbent financial institutions over newer technology-driven firms. The association emphasized that rewards and incentives are standard tools in competitive markets, widely used by banks, card networks, and payment processors.
The industry group compared stablecoin rewards to cash-back programs, loyalty points, and interest-bearing accounts offered by traditional financial services. Preventing crypto platforms from offering similar benefits, it said, creates an uneven playing field and limits consumer choice.
The association also noted that stablecoin rewards can help users offset inflation, particularly in periods of rising living costs, making them a practical feature rather than a systemic risk.
While some banking groups have argued that yield-bearing stablecoins could weaken bank deposits and lending capacity, the Blockchain Association challenged this view. It stated that available evidence does not show stablecoin rewards harming community banks or restricting credit availability.
At the same time, regulators are considering proposals that would allow banks to issue stablecoins through regulated subsidiaries, further fueling concerns that stricter rules on crypto-native platforms could advantage traditional players.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.