Crypto leaders are pushing back on proposed GENIUS Act changes that would restrict stablecoin rewards.

Their concern: limiting incentives could reduce competition and unintentionally favor China’s digital yuan over the US dollar.

Industry voices argue that banning stablecoin rewards could weaken US competitiveness and boost China’s digital yuan
Debate is intensifying in Washington over proposed changes to the GENIUS Act, the US legislative framework governing stablecoins. Crypto executives and advocacy groups warn that pressure from banking lobbies to further restrict stablecoin reward mechanisms could undermine competition and weaken the global standing of the US dollar.
The Blockchain Association criticized recent efforts by community banking groups to push lawmakers into closing what they describe as a “loophole” allowing third-party rewards for stablecoin holders. According to the association, Congress had already reached a carefully balanced, bipartisan agreement, and the renewed push reflects incumbent financial institutions attempting to suppress emerging competitors.
While the GENIUS Act prohibits stablecoin issuers from directly paying interest or yield, crypto exchanges and platforms continue to offer incentive programs funded through alternative structures. Community banks argue these rewards threaten their lending capacity, but industry advocates counter that there is no evidence stablecoin adoption is eroding the traditional banking system.
Blockchain Association representatives stressed that low-yield bank accounts have historically favored large institutions, whereas stablecoin rewards offer tangible benefits to everyday users. They argue that innovation, not protectionism, should guide regulatory policy.
Pro-crypto attorney John Deaton went further, calling the proposed changes a potential “national security trap.” He pointed out that China has begun offering interest-bearing features on its digital yuan, making it a competitive alternative to the US dollar. Restricting stablecoin incentives in the US, he warned, could unintentionally accelerate global adoption of China’s state-backed digital currency.
Paradigm’s head of government affairs, Alexander Grieve, cautioned that reversing reward-related provisions would squander legislative progress. Galaxy Digital CEO Mike Novogratz echoed the sentiment, urging banks to compete rather than rely on regulatory barriers to slow innovation.
As digital currencies reshape global finance, industry leaders argue that the GENIUS Act debate is about more than regulation — it is a strategic decision about the future role of the US dollar in an increasingly tokenized world.

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