Crypto community warns: "Serious consequences if Genius Bill is amended" — stablecoins that do not accrue interest will fall behind China entirely

The US banking industry and the crypto camp are clashing over stablecoin interest, affecting national security, dollar hegemony, and the 2026 election landscape
(Background: US banks jointly submitted a “Genius Act loophole” to Congress: stablecoin interest payments violate financial regulations, turning $6.6 trillion in deposits into ghost money)
(Additional context: China’s stance against stablecoins is already set: allowing digital yuan deposits to earn interest, with StableCoin advantages completely eliminated)

Outside the Capitol, icy winds howl, but inside, a heated tug-of-war over “whether USD stablecoins can generate interest” is underway. Six months after the passage of the 《GENIUS Act》, Wall Street banks and Silicon Valley crypto circles have not only failed to cease fire but have pushed the conflict to the level of national security.

The 《GENIUS Act》 prohibits stablecoin issuers from paying interest directly, but exchanges like Coinbase and Kraken can still offer “rewards” to share profits. The banking industry sees this as regulatory arbitrage, warning that $6.6 trillion in deposits could flow out. Community banking groups have written to Congress stating, “This is not innovation; this is regulatory arbitrage,” demanding immediate fixes and banning reward mechanisms.

Is the Renminbi siphoning off US dollar advantages?

While debates rage within the US, the People’s Bank of China launched e-CNY 2.0 on New Year’s Day, offering a 0.05% annual interest rate for real-name wallets. This small interest rate elevates digital yuan from a payment tool to an interest-earning asset, creating a butterfly effect in the Web3 world. Crypto advocate John Deaton warns:

“When China starts paying interest on digital currency, and the US bans dollar stablecoins from earning yields, we are pushing global capital toward competitors.”

Alexander Grieve, Vice President of Paradigm, also warns that removing rewards is equivalent to handing over the lead advantage.

The dilemma of dollar hegemony

The original intent of the 《GENIUS Act》 was to position stablecoins as zero-interest cash substitutes, isolated outside the banking system to prevent bank runs; however, capital seeks profit. If regulated USD stablecoins are forced to offer zero yields, the market may shift to offshore dollars or simply embrace e-CNY. Galaxy Digital CEO Mike Novogratz mockingly says banks should “stop whining like fourth-graders,” believing competitiveness, not regulatory shields, should be the key.

Although the Trump administration was generally friendly to business, banks remain major Republican donors. With midterm elections approaching, any legislative changes could be overturned by vote counts. Hedge fund pioneer Ray Dalio has already warned that the huge political volatility in 2026, combined with uncertain digital dollar strategies, could mark the beginning of the decline of US dollar dominance.

This battle over interest rates is like closing the road for “coachmen,” trying to slow down the car. If Congress chooses to protect banks at the expense of stablecoin flexibility, historians may mark 2026 as the year the US dollar’s digital advantage begins to wane. Washington needs more than just the name “Genius” on a bill; it requires financial wisdom capable of unraveling the deadlock of national destiny.