TD Cowen analyst Jaret Seiberg estimates a 10% probability that Congress will enact a ban on stablecoin yield payments by crypto platforms over the next two years. The firm suggests that while banks are actively lobbying for such restrictions, the legislative path remains narrow.
The debate centers on whether exchanges should be permitted to offer rewards for holding stablecoins. Banks argue that these yields divert deposits from community institutions, potentially impacting local lending. The American Bankers Association and the Independent Community Bankers of America have previously urged regulators to classify these platform rewards as prohibited interest.
The current regulatory landscape is influenced by the GENIUS Act, signed into law on July 18, 2025, which prohibits stablecoin issuers from paying interest. However, the law does not explicitly cover third-party intermediaries. The OCC's final rules, effective in January 2027, opted for a case-by-case review of platform rewards rather than a blanket ban.
Seiberg notes that legislative progress is complicated by political shifts in the Senate and internal Democratic disagreements. Some lawmakers support rewards for active stablecoin usage, distinguishing them from passive holding. Additionally, there is concern that a ban could be perceived as limiting returns for retail investors, similar to those earned in savings accounts.
