The recognition and promulgation of the US Genius Act on July 18, 2025 marked a turning point in the financial industry.
The legal text designed to establish a stable cryptocurrency regulatory framework expressly prohibits emitters from paying directly profits to holders. However, in order to do so, it does not hinder the intermediary (mainly exchange and custody platforms).
This difference sparked a controversy that, in the words of analyst Simon Taylor, enraged «. lobby Banking business.”
As he sees, the genius law regulating the issuance and negotiation of stubcoins in the United States “creating a legal lagoon.” This allows emitters to share yields through third parties. In his opinion, the bank wants to close the lagoon, but “but we’ve already seen this film. This is the situation that gave us Fintech,” he recalls.
According to Taylor, Stablecoins issuers such as Circle behind USDC are earning yields from bookings deposited on bonds above 4% in Treasury bonds.
He explains that emitters “remain in part of the currency and transfer the rest to distributors such as Coinbase.” It is the largest cryptocurrency exchange in the US, offering a 4.1% reward for USDC users on the platform.
The Bank Policy Institute (BPI), which represents a major US financial organization, believes that the vacuum of yield regulations provided concisely by the stubcoin issuer issuing the regulatory vacuum is provided concisely. It threatens the stability of the financial system.
In a recent report, the agency warns that the ban on yield issues “easily escapes”, and that if this avoidance is still permitted, “the demand for stubcoin could double.”
BPI also warns you of possible side effects. “If stubcoin is supported by treasured debt, bank deposits could fall to 20%,” he says. “Instead, if they are supported by uninsured deposits, that would increase the risk of financial operations,” he adds.
For the laboratory, stablecoins “put political leaders between swords and walls”by changing the balance between banks’ credit and public financing.
Certainly, the banks have run a campaign against stubcoin rewards. Last week, Coinbase attorney general Paul Growal criticized large banking institutions for pushing the US Congress to eliminate these benefits.
«The great banks try to reverse the law (genius). They want rescue because it is difficult to compete with products that often emit foul odors. Stablecoins rewards must be maintained. The project came into effect a month ago, but it’s already law,” Grewal wrote on his social network.
From Durbin Cases to Genius Models
For Simon Taylor, the current dispute maintains similarities with the 2011 Durbin revision, which limits fees for debit card transactions.
“Durbin was the first Institute of Financial Innovation without wanting to do so,” he says. «Large banks lost their margins, but small banks and fintechs found opportunities for regulatory arbitration. The same thing happens with Stubcoin today,” he says.
Taylor remembers as a fintech after Durbin. Chimes, cash apps and squares related to community banks that were not subject to restrictions. «They issued cards, charged larger fees, used their income to provide early payments, eliminated overflows, and actively acquired customers. The model worked: Neo-Bancos has grown into a regulatory difference,” he explains.
Currently, employers are the same, and experts emphasize that Stablecoins publishers focus on compliance and stability, as well as distributors that will be exchanged in the user experience. “It creates specialization and creates value,” says Taylor.
Taylor commented on it Banks consider Stablecoins rewards as a deposit alternativebut from their perspective, “they are cash substitutes.”
He believes these digital assets can “combined with the portability of physical money with digital infrastructure to maintain value outside the banking system, acquire performance, move 24/7 and be settled immediately.”
However, analysts do not believe that the banking system has been convicted, but they have to adapt. He suggests that banks in this sector “see opportunities, not opportunities,” not threats.
This, in his opinion, “Stubcoin opens up new revenue streams. It is sponsoring payment processing, currency conversion and banking models.”
“Community Banks can become the infrastructure layer for emitters, earn bookings and maintain a regulatory advantage,” Taylor says.
Para Austin Campbell, CEO de Zero Knowledge, Banks are in a position to compete with the rise of stubcoins. He points out that the problem is not the technology itself, but the structure of the system.
«Banks are difficult conglomerates. There is no reason for the same institution to combine deposits, loans and risk management. They need to specialize: some are credits, others have payments or interest rates,” says Campbell.
For him, The traditional structure of the bank must be demolishedso they can start competing with stablecons and their yields. He explains that traditional financial institutions have “advantages that Fintech still cannot replicate.” This is access to credit and card franchises.
Taylor is partially in line with Campbell, saying that Durbin’s amendment creates Neo-Bancos and that the Genius Act “creates an integrated finance promoted by the stubcoin.” “History does not repeat itself, it rhymes,” he replied.
“Legal Lagoon or Legal Evolution?”: Bracamonte’s Vision
For Juan Blanco Bracamonte, a consultant specializing in Cryptocurrencies and CEO of Bitdata Venezuela, Discussion is not limited to normative issues. In a dialogue with Cryptooticias, he explains that the rewards offered by platforms such as Coinbase of Stablecoins, such as USDC, have a broader reading.
“Yes, there is a regulatory gray area, but there is evidence of structural transformation. Users demand performance, transparency and immediate liquidity,” experts say. He has since emphasized that traditional banks “dominate interest payments, but now compete with the decentralized model that operates in distributed networks.”
«Legal Lagoon or Evolution? It depends on your approach. For regulators, it is a threat. It’s an opportunity for innovators to democratize access to financial performance,” he says.
Bracamonte, both Durbin amendments and genius law catalyzes the confusion: the first payment, the second deposit. In both cases, the bank is forced to reinvent itself».
He says that stubcoins are no longer simple transfer equipment, but “catalysts for deep conversion of the financial system,” and therefore Bank adaptability is the basis of its own self-sufficiency.
Stubcoin’s ability to provide performance, liquidity and accessibility challenges traditional structures and forces banks, regulators and users to rethink the value of digital money. Moreover, the genius law is not only a regulation, but the beginning of a new era in which competition occurs between models rather than competition between agencies. The future isn’t someone with more power, but he has a better understanding of how to use it.
Juan Blanco Bracamonte, consultant and CEO of Bitdata Venezuela.
Discussions about genius law and stubcoin Revealing structural tensions between regulations and innovationall point to future coexistence where the financial ecosystem will benefit each other.
The reality is that the financial system is already in order, and as a result, banks must be able to adapt unless they want to appear in a clear and imminent delay.
(tagstotranslate)Banks and Insurance
