08-14-2025 
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The American Bankers Association and equivalents from all 50 states plus Puerto Rico and D.C. have written to Senate lawmakers urging them to close loopholes created by the GENIUS Act, the U.S.’s landmark stablecoin legislation.
The letter was sent to Congress as lawmakers consider digital asset market structure legislation, a draft form of which was released by the Senate in July.
“As Congress advances efforts to establish a clear digital asset market structure, the undersigned state bankers associations respectfully call attention to the recommendations outlined below,” it read.
It identifies three key loopholes and presents suggested solutions to each.
One of the complaints involves the GENIUS Act’s prohibition on stablecoin issuers offering yield on payment stablecoins. The bankers praise the prohibition in principle, but argue that it doesn’t go far enough because exchanges can still offer yield products based on stablecoin holdings.
“Banks power the economy by turning deposits into loans; when deposits flow into stablecoins chasing yield, credit creation suffers. To close this loophole and protect the financial system, we urge Congress to extend the stablecoin issuers interest prohibition to cover digital asset exchanges, brokers, dealers, and affiliated entities,” the letter said.
The signatories also ask for the repeal of section 16(d) of the GENIUS Act, which permits out-of-state chartered institutions to provide services across state lines without the approval of the local state authority:
“States have both the constitutional authority and practical responsibility to license and supervise financial institutions that serve their residents. Congress should repeal section 16(d) to reaffirm states’ ability to protect consumers and ensure a level playing field for all institutions operating within their borders.”
Lastly, the latter asks that lawmakers close a loophole created by GENIUS whereby non-financial companies can act as stablecoin issuers. Under GENIUS, non-financial public companies are prohibited from issuing stablecoins, but it gives authority to the new interagency Stablecoin Certification Review Committee (SCRC) to grant exceptions.“Any approval path poses serious risks and marks a major shift in federal policy that demands additional public scrutiny. We urge Congress to strengthen this prohibition by eliminating all approval pathways and including non-financial private companies. Allowing such special treatment for certain companies risks regulatory arbitrage and undermines longstanding safeguards in financial regulation.”
The letter concludes by stressing the need for legislation to ensure that the digital asset industry “develops in a way that supports—not disrupts—the broader financial system.”
The letter comes as part of what is becoming an inflection point for the digital asset industry. The White House’s mammoth digital assets report, released last week, set regulators, lawmakers, and industry players scrambling to assimilate the vast recommendations. At the same time, the Senate’s digital asset market structure bill was released in late July, setting a deadline of August 5 for feedback.
See the full letter here.
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