What started as a legislative victory for the traditional financial system appears to be turning into a new front. This comes as U.S. community banks have launched an urgent appeal to Congress to fill what they believe are “dangerous gaps” in the GENIUS Act, the regulations passed in 2025 to regulate the stablecoin ecosystem.
Even though it’s a law Explicitly prohibit direct payment of interest Regarding these digital currencies, the Community Bankers Council of the American Bankers Association (ABA), the main U.S. banking trade group, has accused the digital asset industry of finding shortcuts.
According to a letter sent to the Senate on January 5, 2026 and endorsed by more than 200 industry leaders, several Bitcoin (BTC) and crypto companies We provide indirect benefits through partners and exchangesthus ignoring the spirit of the standard.
Therefore, the biggest concern for local banks is the outflow of deposits. This means that if savers migrate to stablecoins en masse, attracted by these returns, the traditional banking system will break down. You may lose your main source of information About financing.
It is estimated that up to $6.6 trillion in bank deposits could be at risk, according to figures maintained by the U.S. Treasury Department. “If these funds were to be drained, small businesses, farmers and families looking to buy their first homes in cities like ours would suffer the consequences,” the council warned in the letter.
ABA President Rob Nichols was more blunt in his warning to industry leaders: Legal ruling threatens to divert trillions of dollars from traditional banking circuits. He said it was “critically important” that banks “call on policymakers to expand interest caps or provide yield-like rewards on payment stablecoins to cover all market participants.”
The crypto asset industry rejects this view. As previously reported by CriptoNoticias, the Blockchain Association said it rejects a ban on stablecoin rewards. They argue that limiting rewards to users is a mistake and will hurt competitiveness and the modernization of financial services.
Adoption or regulatory capture?
Analyst and university professor Omid Malekan sees a more complex phenomenon, which he calls the “innovation dilemma.” He comments that while major companies such as Visa, SWIFT and PayPal are eagerly announcing their entry into the world of Bitcoin and cryptocurrencies, very few companies are mentioning this technology. It was designed precisely to eliminate the need for middlemen like them.
In the world of cryptocurrencies, “payment is the message.” SWIFT messaging system used by banks when stablecoins can be used to settle international transactions instantly and almost free of charge risk of becoming irrelevant. The same goes for credit card models and payment institutions. In other words, if assets are transferred directly between users, why do we need a messenger? Malekan asks.
In this way, the traditional system (TradFi) facing unprecedented competition. This is due to the existence of public networks like Bitcoin, which never rest, have no borders, and do not belong to anyone.
For now, community banking is sounding the alarm. However, this story reveals that the real threat is not the loophole in the GENIUS law. It is possible that in the not-too-distant future, the concept of “bank” as we know it will no longer be necessary.
(Tag Translate) Banking and Insurance
