Bank Groups Warn Senate Stablecoin Plan ‘Falls Short’ as Crypto Rewards Debate Heats Up
(Bloomberg) — Major banking industry groups on Monday pushed back against a Senate proposal aimed at structuring the stablecoin market, warning that a contentious provision on rewards still “falls short” despite recent claims of progress from crypto exchange Coinbase Global Inc. and Democratic Senator Angela Alsobrooks.
The American Bankers Association and the Bank Policy Institute issued a joint statement saying the latest draft language contains what they called a “significant loophole” that could allow crypto exchanges to effectively pay interest on stablecoins through membership programs, blurring the line between digital assets and traditional deposit accounts.
“This is a significant loophole that must be addressed,” the groups said, adding that they would submit “detailed suggestions” to lawmakers in the coming days. The pushback escalates pressure on U.S. lawmakers to continue negotiations over the stablecoin rewards provision, which has become a major sticking point in broader crypto market structure legislation.
At the heart of the dispute is whether stablecoins — digital tokens typically pegged to the U.S. dollar — should be allowed to function like yield-bearing cash accounts when paired with exchange-run reward programs. Banks warn this could siphon deposits away from traditional lenders, even if the funds remain within the broader financial system. The banking sector’s renewed opposition is likely to further delay the sweeping crypto bill, which has been stalled in the Senate since Coinbase withdrew its support in January.
Coinbase had signaled last week that a deal had been reached on the rewards issue, and Senator Alsobrooks echoed that sentiment earlier Monday, saying she believed the dispute had been “resolved.” But the bank groups’ sharp rebuttal suggests the matter is far from settled.
Spokespeople for Coinbase and Alsobrooks did not immediately respond to requests for comment.
Industry Reactions
“This is yet another example of the crypto industry trying to have it both ways — they want the stability of a bank-like product without any of the regulation,” said Marcus Delaney, a former FDIC examiner now advising fintech startups. “If stablecoins start paying interest like savings accounts, they should be regulated like savings accounts. Period.”
Elena Torres, a policy analyst at a Washington D.C.-based think tank, took a more measured view: “There’s room for compromise here. The banks aren’t wrong to flag the risks, but the crypto industry also has a point that innovation shouldn’t be stifled. The real question is whether lawmakers can find a middle ground before the bill dies entirely.”
Jake Morrison, a retail investor from Austin, Texas, was less diplomatic: “The banks are just scared of competition. They’ve had a monopoly on our money for decades, and now that crypto offers something better — actual yield — they’re running to Congress to pull up the ladder. It’s pathetic.”
The stablecoin rewards debate underscores the broader tension between traditional finance and the crypto sector, as both sides vie for influence over the rules that will shape the future of digital payments and banking.
—With assistance from Steven T. Dennis.
©2026 Bloomberg L.P.