U.S. banks are lobbying Congress to extend restrictions on stablecoin rewards, warning that crypto-linked yields threaten a core revenue model built on payments and deposits.
The push targets income streams worth more than $360 billion annually, costs that critics describe as a hidden tax on American households approaching $1,400 per year.
The $360 Billion at Stake
Banks generate massive income from routine consumer activity. Around $187 billion comes from interchange fees, commonly called swipe fees. Each credit card purchase triggers a 2% to 3% fee paid by merchants to issuing banks. While a portion returns to customers as rewards, merchants typically pass the cost on through higher prices.
Another $176 billion flows from interest earned on reserves held at the Federal Reserve. U.S. banks collectively park roughly $3 trillion at the Fed, earning predictable, low-risk returns. Stablecoins offering rewards or yield-like incentives are increasingly seen as a direct challenge to that income.
Why Banks Are Pressing Lawmakers
The American Bankers Association, alongside 52 state banking associations, has sent a letter to Congress calling for tighter language around stablecoin rewards. Their concern is that crypto platforms are competing for consumer balances without facing the same regulatory constraints as banks.
At the center of the dispute is the GENIUS Act, signed in July 2025, which bans stablecoin issuers from paying interest directly or indirectly. Bank groups argue the rule is being undermined in practice.
The ‘Loophole’ Banks Want Closed
Crypto platforms currently offer rewards through affiliate or loyalty programs, classifying them as incentives rather than interest. Under a narrow interpretation of the law, those programs remain legal.
Banks want Congress to add clarifying language in upcoming market-structure legislation so that affiliate-based rewards are explicitly treated as prohibited yield. In their view, allowing these programs preserves a competitive advantage for crypto firms at the expense of regulated institutions.
Crypto Industry Pushback
Crypto companies strongly oppose the move. Firms such as Coinbase argue that banning rewards would entrench incumbent banking margins rather than protect consumers. They warn that limiting innovation in the U.S. could push capital and development toward jurisdictions where digital currencies are allowed to offer yield.
The fight over stablecoin rewards has become less about technology and more about control over consumer balances, highlighting a growing clash between traditional finance and crypto over who captures value in everyday payments.
