Opinion: The GENIUS Act has become law, and banks should not now attempt to rewrite it
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Opinion: The GENIUS Act has become law, and banks should not now attempt to rewrite it
Consumers win when there is competition.
Navigating Web3 tides with focused insightsAuthor: Summer Mersinger
Translation: TechFlow
Traditional financial institutions should embrace competition actively, rather than suppress emerging firms through anti-innovation regulations, says Summer K. Mersinger, CEO of the Blockchain Association.
Healthy competition drives innovation and delivers better products to consumers, which lies at the heart of America's economic leadership. Yet disappointingly, as the bipartisan GENIUS Act has officially become law, many traditional financial institutions appear unsettled by the innovation stablecoins bring to financial markets.
Bank lobbying groups and public affairs teams have continuously voiced complaints about the bill to Congress, urging lawmakers to reopen discussions and amend the legislation to prevent the stablecoin market from growing too quickly—thereby protecting bank profits and limiting consumer choice.
This reaction is both exaggerated and unnecessary. What traditional financial institutions should truly do is embrace competition and launch innovative products and services that consumers actually need, instead of suppressing emerging firms with anti-innovation rules and regulations.
The GENIUS Act was carefully crafted through comprehensive bipartisan collaboration to strengthen consumer protections, ensure regulatory oversight, and maintain financial stability. Efforts to roll back its provisions are more about protecting entrenched banking interests than protecting families. This kind of competition helps ensure that the U.S. banking system remains the strongest and most innovative in the world.
Critics warn that allowing stablecoins to offer rewards could trigger massive outflows from community bank deposits, citing figures as high as $6.6 trillion. However, further analysis reveals that these concerns are unfounded.
A July 2025 analysis by consulting firm Charles River Associates shows no statistically significant relationship between stablecoin adoption and community bank deposit outflows. In fact, the vast majority of stablecoin reserves remain within the traditional financial system—either held in commercial bank accounts or invested in short-term Treasuries—continuing to support broader liquidity and credit across the U.S. economy. Those alarming estimates rely on unrealistic assumptions that every dollar of stablecoin issuance permanently exits the banking system.
Stablecoins are not draining resources from lending activities. In fact, according to a report by the Treasury Department, their growth may over time increase inflows into the U.S. money supply. This means Americans can enjoy modern, programmable digital dollars without threatening the availability of credit within communities.
Others are calling for the repeal of Section 16(d) of the GENIUS Act, which allows subsidiaries of state-chartered institutions to conduct stablecoin business across state lines without additional licensing. Repealing this critical provision would result in a fragmented and inefficient regulatory regime, stifling interstate commerce.
Innovation has always been the lifeblood of American capitalism—it’s what distinguishes a dynamic market economy from a stagnant, protectionist one. Banks should not seek to crowd out new market participants but instead strive to ensure current and future customers have access to cutting-edge products and services, including healthier deposit account interest rates.
Despite the Federal Reserve’s current target rate being above 4%, the average checking account yields just 0.07% and savings accounts 0.39%. This gap does not reflect consumer protection but rather the value captured by banks. By contrast, stablecoin reward programs allow platforms to compete directly for customers, forcing traditional institutions to deliver better value.
When competition exists, consumers win.
The GENIUS Act positions the United States as a global leader in digital finance while maintaining the strongest consumer safeguards. Congress has already addressed these issues through careful bipartisan deliberation. The law requires reserves to be held one-to-one in cash or Treasuries, implements strict licensing and oversight, and offers transparency far beyond traditional deposits. Reopening these matters now would undermine consensus and threaten U.S. leadership in digital finance.
Stablecoins are not loopholes but innovations that deliver the benefits of competition to consumers while safeguarding the stability of the banking system. Policymakers should see through the fear-based narratives and uphold the balanced, bipartisan framework Congress has established.
Innovation and competition built American financial leadership. It’s time to let them work again—don’t let entrenched interests block their promising growth. American consumers deserve more choices.
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