U.S. Banks Urge Trump to Ban Interest on Stablecoins
An April report from the U.S. Treasury, warned of a potential $6.6 trillion (5.66 trillion euros) shift from banks to crypto exchanges.
Quick overview
- U.S. banks are urging the Trump administration to ban crypto trading platforms from offering interest or rewards for stablecoins, which traditional banks cannot do.
- This request follows the implementation of the Genius Act, which aims to regulate the crypto market but has been criticized for potential loopholes.
- Industry groups warn that allowing interest on stablecoins could lead to significant deposit outflows from banks to crypto exchanges, risking financial stability.
- President Trump is expected to take several months to decide on a successor for Federal Reserve Chair Jerome Powell, whose term ends in May 2026.
U.S. banks have called on the Trump administration to prohibit crypto trading platforms from paying interest or offering rewards for holding stablecoins—a practice not allowed for traditional banks.
The push comes as the Genius Act, passed last July to regulate the crypto market, is being implemented. The American Bankers Association, the Bank Policy Institute, and the Consumer Bankers Association warned of “loopholes” in the legislation, noting that while banks cannot remunerate stablecoins, platforms are allowed to offer interest or rewards if the asset is issued by third parties.
Industry groups say this could trigger a deposit outflow, as clients may prefer holding stablecoins on exchanges rather than keeping assets in traditional banks.
An April report from the U.S. Treasury, cited by the Financial Times, warned of a potential $6.6 trillion (5.66 trillion euros) shift from banks to crypto exchanges, depending on the yields offered by stablecoins.
The financial sector also highlighted that such a scenario would pose “greater risks of banking panics, especially during crises,” potentially reducing credit creation and lending, while increasing funding costs for households and businesses.
Trump Yet to Name Next Fed Chair, Decision Expected to Take Months
President Donald Trump’s decision to replace Federal Reserve Chair Jerome Powell is not expected immediately, with reports suggesting it could take “several months” to select a successor. Powell’s term ends in May 2026. Potential candidates have already leaked in recent weeks.
Amid rising tensions between the White House and the Fed, including accusations and threats of dismissal from Trump toward Fed officials, the President’s economic advisor, Kevin Hassett, said the decision is far from finalized.
“I would expect this to take a few more months before the President decides who will be the next Fed chair,” said Hassett, director of the National Economic Council.
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