The GENIUS Act Is Already Enacted: Financial Institutions Should Not Attempt to Alter It

Competition is the driving force behind innovation, leading to better products for consumers and is a cornerstone of American economic dominance. However, following the passage of the bipartisan GENIUS Act, major traditional financial institutions appear to be reevaluating the potential of stablecoins to transform financial markets. Bank lobbying groups have been urging Congress to reconsider the law and propose amendments that would slow the growth of the stablecoin market, thereby protecting bank profits and limiting consumer options. This reaction is unwarranted and excessive. Instead, traditional financial firms should focus on developing innovative products and services that meet consumer demands, rather than attempting to stifle emerging competitors through restrictive regulations. The GENIUS Act was carefully crafted through a bipartisan process to enhance consumer protection, ensure regulatory oversight, and maintain financial stability. Efforts to roll back its provisions are more focused on shielding entrenched banking interests from competition than protecting consumers. Critics argue that allowing stablecoins to offer rewards could lead to significant deposit outflows from community banks, with estimates as high as $6.6 trillion. However, a closer examination reveals that this concern is unfounded. A July 2025 analysis by Charles River Associates found no statistically significant relationship between stablecoin adoption and community bank deposit outflows. In fact, the majority of stablecoin reserves remain within the traditional financial system, supporting liquidity and credit in the broader US economy. The alarming estimates are based on unrealistic assumptions that every dollar of stablecoin issuance permanently leaves the banking system. Stablecoins are not diverting resources away from lending; if anything, their growth may increase inflows to the US money supply over time, according to a Treasury Department report. This means Americans can benefit from modern, programmable digital dollars without compromising the availability of credit in their communities. Some have advocated for the repeal of Section 16(d) of the GENIUS Act, which permits subsidiaries of state-chartered institutions to conduct stablecoin business across state lines without requiring additional licenses. Repealing this crucial provision would result in a fragmented and ineffective regulatory regime that hinders interstate commerce. Innovation is the lifeblood of American capitalism, distinguishing dynamic market economies from stagnant, protected ones. Rather than attempting to exclude new market entrants, banks should focus on providing their current and future customers with access to cutting-edge products and services, including more competitive interest rates on deposit accounts. While the Federal Reserve's target rate is above 4%, the average checking account yields only 0.07%, and savings accounts yield 0.39%. This disparity does not reflect consumer protection; rather, it reflects the value captured by banks. Stablecoin rewards programs enable platforms to compete directly for customers, forcing incumbents to offer better value. Consumers benefit from competition. The GENIUS Act positions the US as a global leader in digital finance while maintaining robust consumer protections. Congress has already debated and resolved these issues through careful bipartisan deliberation. The law mandates one-to-one reserves in cash or Treasuries, robust licensing and supervision, and transparency that exceeds traditional deposit expectations. Revisiting these issues would undermine the existing consensus and threaten to slow America's leadership in digital finance. Stablecoins do not represent a loophole; they represent an innovation that preserves the stability of the banking system while providing consumers with the benefits of competition. Policymakers should see through this fear campaign and uphold the balanced, bipartisan framework Congress has already enacted. Innovation and competition have driven American financial leadership; it is time to allow them to work again and not permit incumbent interests to stifle their promising growth. American consumers deserve nothing less.