Re-litigating the GENIUS Act Brings Risk and No Rewards

The GENIUS Act represents something harder and harder to find in Washington: genuine bipartisan consensus on complex financial policy. After months of negotiation and compromise, Congress delivered a stablecoin framework designed to protect consumers, support innovation, and reinforce the dollar’s global leadership. Now, just as regulators begin the hard work of implementation, some in the Big Bank lobby want to reopen settled issues, using the ongoing market structure legislation to inject amendments to the GENIUS Act. That approach risks undermining both efforts.

Implementation of the GENIUS Act won’t be simple or quick. The Treasury Department’s Office of the Comptroller of the Currency and other federal stablecoin regulators face a technically demanding agenda: defining reserve composition standards, establishing auditing and disclosure requirements, setting licensing and capital expectations, and tailoring anti-money laundering and sanctions regimes to stablecoin issuers. Each of these decisions will shape how stablecoins are issued in practice.

The agencies have only just begun this process — a process that will take time, public engagement, and careful consideration, extending well into 2026. Nothing prohibits the Big Banks from engaging through the rulemaking process like everyone else.

The Big Bank lobby is pushing Congress to short-circuit that process by statutorily banning third parties from offering yield or rewards for holding users’ stablecoins. If successful, the banks would effectively kill the competitiveness of the stablecoin industry.

The core argument — that increased stablecoin adoption will trigger deposit flight or create systemic risk — doesn’t hold up to scrutiny. Stablecoins regulated under the GENIUS Act are fully backed by reserves of cash and short-term Treasuries. Stablecoins do not engage in maturity transformation, extend credit, or rely on leverage. In fact, the assets backing regulated stablecoins are among the safest in the financial system — the same assets banks themselves turn to in times of stress.

Nor do stablecoin rewards programs differ meaningfully from other incentives used to encourage consumers to use a particular platform. Consumers have long received rewards from third-party financial platforms — from brokerage cash management accounts to payments apps – for using their services. Incentives offered by an exchange or fintech platform for custodying stablecoins are not materially different from cash bonuses for using a certain credit card or mileage benefits for booking flights with a specific airline. The GENIUS Act ensures that stablecoin rewards cannot be provided by the issuer or the asset itself; they can only be offered by third parties on a discretionary and entirely optional basis.

Stablecoin rewards programs put more money in the pockets of American consumers. If banks are not willing to offer their own pro-consumer programs, it is only natural that consumers will seek out alternative services. When provided with the proper incentive, consumers already move funds freely among banks, money market funds, brokerage accounts, and payment apps. That mobility is not a flaw — it is a hallmark of a competitive financial system. Moreover, claims about deposit flight deserve particular skepticism. There is no evidence that greater stablecoin adoption will displace insured bank deposits at scale. When consumers use stablecoins, they primarily do so for payments, settlement, and cross-border transactions — areas where traditional systems remain slow and costly.

Congress took all of this into careful consideration when they wrote the GENIUS Act. They intentionally banned issuers from offering yield, but preserved the ability for third parties to offer rewards. House Financial Services Chairman French Hill has acknowledged that questions around packaging, distribution, and third-party programs are best addressed through the regulatory process now underway at Treasury.

That is exactly the point. Congress already made the policy decision to empower regulators to work through these issues during rulemaking.

There is also a broader risk that if bipartisan agreements like the GENIUS Act can be immediately reopened whenever an incumbent industry dislikes their competitive implications, legislative compromise becomes impossible. Re-litigating stablecoin policy while market structure negotiations and GENIUS implementation are underway threatens both efforts. It signals that carefully negotiated legislative bargains are provisional and invites defection from bipartisan coalitions.

The responsible path forward is clear. Treasury should be allowed to complete GENIUS Act implementation, working through the complex technical questions Congress deliberately left to regulators. Meanwhile, Congress should stay focused on market structure legislation without pressure to include language revisiting settled issues.

After implementation produces data on stablecoin usage and regulators gain experience with digital assets, Congress can assess whether targeted amendments are warranted. That sequencing respects both the legislative process that produced the GENIUS Act and the regulatory process required to make it work.

Congress passed the GENIUS Act with strong bipartisan support rarely seen in Washington. This vote reflected thoughtful negotiations that took relevant risks into account and placed consumers above all else. To honor this work, implementation must come before amendment. That is how Congress preserves bipartisan trust and how it ensures crypto market structure legislation succeeds.