American banking groups challenge stablecoin proposals

Crypto World News reports that the American banking community opposes the latest stablecoin reward proposal, arguing that the proposal fails to adequately prevent bank deposit risks. The American Bankers Association, the Bank Policy Research Institute, the Consumer Bankers Association, the Financial Services Forum, and the Independent Community Bankers of America jointly stated in a declaration that the revised stablecoin yield terms “fail” to prevent deposit outflows, despite legislative efforts to address this issue. The statement mentioned that Senators Tom Thillis and Angela Alsobrooks are “seeking to achieve the right policy goals,” but the current draft does not fully address the loopholes related to the reward structure. The banking groups indicated that the proposal restricts interest payments on idle stablecoin balances while still allowing transaction-based incentives, which could lead to funds flowing out of traditional banks. The banking groups plan to submit detailed recommendations to legislators in the coming days, emphasizing the need for clearer restrictions to protect deposit-based lending systems, especially for local and community institutions.