US banks are united in demanding that authorities take further action against stablecoins.
The main controversy centers around stablecoins that pay interest, a practice that the traditional banking industry views as unfair competition and a financial risk.
Jeremy Burnham, JPMorgan’s chief financial officer, bluntly called some of these stablecroins “dangerous and undesirable.” These assets act as deposits that pay interest without banking rules, so.
The bank argues that a “shadow banking system,” in which banks enjoy the benefits of banking operations while ignoring their responsibilities, should not be tolerated. Burnham emphasized that JPMorgan is not “anti-technology,” citing its Ethereum tokenization fund and the deal with Coinbase, as well as Kinexis, a division focused on digital assets and institutional digital payments.
but, Make clear that criticism is specifically directed at circumventing banking regulations. The executive said it would create an imbalance and affect the stability of the sector “if we are allowed to collect deposits without adhering to banking laws that we have followed for hundreds of years.”
JPMorgan executives acknowledged there is a real threat to the traditional business model. Their argument is that if money flows out of the banking system into stablecoins, banks will have less lending capital and the entire financial ecosystem will be disrupted.
Burnham added that analysis needs to focus on the “real benefits to consumers” and suggested that if these stablecoins are popular simply because of a lack of regulation, they are “a solution in search of a problem” and an unnecessary risk.
Loopholes in the 2025 GENIUS Act
The GENIUS Act was passed in the United States in 2025 to regulate stablecoins. The American Bankers Association (ABA) believes this regulation is insufficient..
The ABA says new technology “allows companies to circumvent regulations and oversight that banks must follow, creating market distortions, leaving consumers unprotected and harming those who play by the rules.”
The biggest problem is a loophole that allows exchanges to offer interest-like returns in the form of “rewards.”
“Community banks are particularly vulnerable[to stablecoins]because they rely heavily on local deposits to fund loans to households and small businesses,” the ABA Council of Community Bankers said. “As deposits decline, so do loans, and the impact is significant.”
therefore, Urged senators to close loopholes in GENIUS law This provides issuers with a way to pay interest, something the law was originally intended to prohibit.
Reactions from the digital asset field
Despite pressure from banks, several companies have stepped up to create stablecoins in the wake of the GENIUS Act.
For example, self-custodial digital asset wallet Exodus has announced plans to issue its own digital currency, and companies like Western Union are also preparing to compete in the market. However, the possibility of banning returns has sparked strong opposition in the tech industry.
As reported by CriptoNoticias, the Blockchain Association has expressed its rejection of a possible ban that would prevent service providers from offering incentives to holders of these currencies.
The company, supported by more than 125 companies, sent a letter to the Senate Banking Committee warning that “extending restrictions to third parties would limit innovation and encourage further market concentration.”
(Tag translation) Altcoin
