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US banks urge the congress to close a “escape” yield of stabbling that they warn could drain up to 6.6 billions of dollars in traditional banking system, potentially destabilizing credit flows and American households.
The Bank Policy Institute (BPI), as well as the American Bankers Association, the Consumer Bankers Association, the Financial Services Forum and the independent community banks in America have all expressed their concerns in a letter At Congress yesterday.
They have expressed concerns about the current formulation of the guide law and establishment of national innovation of the Stablescoins (engineering) law. Signed on July 18, 2025, the law establishes rules and regulations for stable issuers to follow.
The law on engineering has been among the most transformative laws for decades.@Jerallairewith @Richardquest on @CnnExplain what it means for stablecoins. pic.twitter.com/bmliwjix3q
– Circle (@circle) July 23, 2025
Among these rules, there is a ban on stablecoin issuers which prevents them from providing interests or giving in directly to holders. According to the BIP, however, the law does not explicitly extend the prohibition on the exchanges of crypto or affiliated companies.
In the letter, the BIP warned that “without an explicit prohibition applying to exchanges, which act as a distribution channel for stable transmitters or commercial affiliates, the requirements of the engineering law can be easily evaded and undermined by allowing the payment of interests to stored holders.”
“The result will be a greater risk of theft, in particular during stressful periods”, which, according to the BIP, will have a negative impact on the creation of credit “throughout the economy” and will trigger 6.6 billions of dollars of deposit outings of the traditional banking system.
The consequences of this will occur “higher interest rates, less loans and increased costs for main street companies and households,” said the banking group.
Stablecoins are fundamentally different from traditional products bearing the yield
The banking group has said that stablecoins are fundamentally different from bank deposits and money market funds because they do not finance loans or do not invest in securities to give holders.
Instead, Stablecoin issuers such as Tether (USDT transmitter) and Circle (USDC transmitter) generate and transmit returns in several ways to holders via third-party platforms.
These two companies have the same amount of reserves in Fiat, in their case the US dollar, because the amount of their tokens which are in circulation to guarantee that their blockchain tokens maintain a 1: 1 ankle to the greenback.
These reservations are largely in the short term, interests with assets such as US Treasury bills, whose issuers then pay interest to holders.
However, due to the prohibition of the law on engineering, issuers are not allowed to distribute interest in holders directly. To get around this, issuers like Tether and Circle conclude income sharing agreements with third parties or turn to loan and guard platforms like Blockfi and Gemini.
For example, Jamming Currently offers a return of 4.1% to any person holding USDC on their platform.
There are also stablescoins provided by yield such as the OUSD and SDAI which automatically integrate the yields of the DEFI loans, real asset yields or implement other strategies directly in the token. However, these stablecoins tend to pay a higher risk level compared to USDT and USDC risks, mainly smart, market and liquidity contracts.
These distinctions said that the BIP, “are why the stables of payment should not pay interest as do the highly regulated and supervised banks on deposits or offer yield as do the money market funds.”
Stable market a percentage of the American money supply
The signing of the law on genius last month was celebrated as an important stage and a moment in the watershed for cryptographic space. Many have seen its signature which passes and subsequent as the first step towards American regulators offering the industry that is long -awaited legal clarity.
His signing also comes when US President Donald Trump and federal agencies are growing to make the United States the world capital of cryptography.
During the first week of signing the Act on Engineering, the market capitalization of Stablecoins jumped $ 4 billion to $ 264 billion, according to to Defillama data.
Stablecoin stock market cup (Source: Defillama)
During last week, the combined evaluation of stables in circulation increased by more than 1%, or around $ 2.76 billion to reach around 271.37 billion dollars at 6 h 23 hne.
This growth should continue in the years to come. In an April 30 reportThe US Treasury predicted that the Stablescoin market could reach around 2 dollars by 2028.
On August 8, the S&P Global Ratings marked history and awarded a credit rating “B” to the Stablecoin, Sky Protocol protocol. The platform uses stablescoins DAI and USDS.
Despite increasing capitalization and the recognition of stablecoins, the sector still constitutes a fraction of the American money supply. At the end of June, the American Federal Reserve (Fed) reported That the American money supply was 22 billions of dollars.
The USDT of Tether remains the largest stablecoin by market capitalization by a comfortable margin. Coinmarketcap data promotes $ 164.99 billion.
Top stablecoins by market capitalization (source: Coinmarketcap))
The USDC, which is supported by the New York Stock Exchange Company (NYSE) Circle, is the second largest stablecoin on the market with its capitalization of more than $ 66.31 billion.
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