Crypto groups urge U.S. Senate to reject banking proposals altering the GENIUS Act, warning of threats to innovation and stability.
Two of the cryptocurrency industry’s leading advocacy organizations, the Crypto Council for Innovation (CCI) and the Blockchain Association, have formally opposed recent efforts by traditional banking groups to amend the newly enacted GENIUS Act. On August 19, 2025, the two organizations sent a joint letter to the U.S. Senate Banking Committee, requesting the legislators to oppose recommendations made by the American Bankers Association (ABA) and a number of state-level banking associations.
Crypto Groups Warn Against GENIUS Act Revisions
The recently enacted GENIUS Act is broadly seen as a first step towards a regulatory modernization of the United States approach toward digital assets. It aims at embracing innovation, financial stability, and retaining the status of the U.S. in the dynamically developing sphere of digital finance. The banking groups, as stipulated in the letter, are trying to promote changes that would make a radical change in the scope and intent of the legislation.
The advocacy groups claim that the suggested changes will lead to a re-imagining of language which has already been approved and adopted by Congress. They argue that these revisions would not only derail the intended aim of the GENIUS Act, but also create regulatory uncertainty. Such, they caution, would deter innovation and investment in the U.S. digital asset space and damage the competitiveness of the nation in the international fintech marketplace.
Related Reading: US Banks Demand Closure of GENIUS Act’s Stablecoin Yield Loophole | Live Bitcoin News
The main issue in this debate is whether stablecoin issuers’ affiliates, like crypto exchanges, should offer yield products. The GENIUS Act already blocks issuers from paying yields directly to users. However, the ABA worries that affiliated platforms could still offer yields in other ways. As a result, banking groups claim this could create a loophole. They believe it would shift large amounts of money from traditional banks to stablecoins. Consequently, they argue this shift might reduce the credit available to households and businesses, harming the broader economy.
GENIUS Act at Risk as Senate Weighs Bank Proposals
The CCI and Blockchain Association argue that payment stablecoins are not the same as bank deposits and should not face identical regulations. They explain that, unlike traditional deposits, stablecoins operate on different technologies and serve distinct functions within the digital asset ecosystem.
As a result, applying the same rules would be inappropriate and counterproductive. Moreover, they warn that repealing Section 16(d) of the GENIUS Act would create a fragmented regulatory landscape. This section currently allows state-chartered stablecoin firms to operate across state lines, and its removal, they caution, would restrict innovation and disrupt interstate commerce. Therefore, they urge lawmakers to preserve the Act’s original structure to ensure clarity and continued growth in the crypto sector.
The conflict highlights the bigger and more prolonged tension between the established financial system and the new crypto sector. Although the two sectors are complaining about financial stability and consumer protection, they significantly differ in their approach to regulation. Banks tend to argue in favor of additional restrictive measures to reduce systemic risks, and crypto enthusiasts underline the importance of regulatory clarity, flexibility, and neutrality about technology.
With the Senate Banking Committee considering the ABA recommendations, the ruling is highly expected to have long-term consequences on the regulatory framework of digital assets in the United States. The crypto advocacy organizations are urging legislators to leave the GENIUS Act as is, stating that in its current form, it would help stimulate responsible innovation, keep competitive forces balanced, and keep the United States on the cutting edge of digital financial innovation.
The next few weeks could make or break the future of the crypto industry by establishing the GENIUS Act as a solid base of future crypto regulation, or opening it to amendments that skew the balance between innovation and other financial forces.
