- GENIUS Act prohibits stablecoin issuers from paying interest to holders, aiming at consumer protection over yield features industrywide.
- David Sacks claims bank lobbying forced inclusion of interest ban, protecting traditional deposits from digital-dollar competition market share.
The GENIUS Act, passed in the United States on June 20, 2025, sets new rules for the issuance and operation of stablecoins within the country. While the stated goal of the legislation is to increase consumer protection, the law includes a clause that blocks stablecoin issuers from offering interest to holders—an issue that has drawn sharp criticism from both industry leaders and market participants.
David Sacks, a tech entrepreneur recently appointed as “Crypto Czar” under Donald Trump’s advisory team, has publicly questioned the motivations behind this restriction. In a recent interview, he argued that the provision was not essential to the regulatory effort but rather a concession to traditional banks, which fear losing market share to digital dollar alternatives.
Sacks claimed that bank lobbyists, particularly from regional banks, influenced lawmakers to block interest-bearing stablecoins in order to prevent a competitive threat.
Stablecoins such as USDC or USDT are commonly used for holding dollar value in digital form. In some markets, issuers have provided interest-bearing options, giving users returns similar to savings accounts. The GENIUS Act removes that option in the U.S., regardless of the asset backing or platform involved.
David Sacks just said the quiet part out loud
The GENIUS Act was written by the banking industry to keep stablecoin issuers uncompetitive with legacy system products pic.twitter.com/nqZeWDISgT
— Pledditor (@Pledditor) June 21, 2025
According to Sacks, some banks were concerned that interest rates of 5% or more on stablecoins could attract deposits away from traditional banking services. He acknowledged the concern, but argued that the threat was overstated. “I don’t think that’s what would have happened,” Sacks stated. He framed the ban as a compromise designed to ensure bank cooperation in the legislative process rather than a measure based on consumer safety.
Sacks also expressed hope that this provision could be revisited in the future, especially if banks enter the stablecoin sector themselves. He implied that if banks begin issuing or partnering with stablecoin providers, the current rules might evolve to allow interest payments as a standard feature.
Max Keiser, a well-known Bitcoin advocate, also weighed in on the issue. He described the GENIUS Act as an example of the financial system favoring centralized control over open alternatives.
As I’ve been saying, stablecoins 𝘼𝙍𝙀 𝙉𝙊𝙏 an on-ramp to Bitcoin. They’re designed to be an on-ramp to the US Dollar; empowering politicians & issuers, who are working with the legacy banks to fight self-custodied Bitcoin (& freedom from fiat slavery). https://t.co/R1K04sQ8Ln
— Max Keiser (@maxkeiser) June 21, 2025
Keiser argued that stablecoins have become a channel for maintaining U.S. dollar exposure globally, but that their regulatory design is increasingly aligned with traditional banking practices that resist user autonomy—especially with regard to Bitcoin self-custody.
The GENIUS Act arrives at a time when digital assets are gaining broader attention in public policy discussions. Yet the law’s structure reveals the balance of power that exists between new crypto models and legacy financial institutions.
