The Blockchain Association, a prominent advocacy group within the cryptocurrency sector, has voiced its opposition to a proposed extension of the stablecoin yield prohibition. In a letter addressed to the U.S. Senate Banking Committee, which garnered signatures from over 125 industry organizations and companies, the group contends that including third-party service providers in the ban would lead to anti-competitive practices.

The GENIUS stablecoin regulatory framework, as mentioned in their letter, currently limits stablecoin issuers from directly sharing yields with customers. The Blockchain Association argues that this prohibition stifles innovation and fosters greater market concentration.

In their communication, the association compared rewards offered by crypto platforms to those provided by traditional financial institutions, such as credit card companies and banks.

“The potential benefits of payment stablecoins will not be realized if these types of payments cannot compete on a level playing field with other payment mechanisms. Rewards and incentives are a standard feature of competitive markets.”

This highlights the necessity for crypto platforms to maintain competitive rewards for stablecoin users, as restricting these could disadvantage them against established financial service providers.

As part of ongoing advocacy, the Blockchain Association has reiterated its arguments against restricting yield-sharing capabilities, stressing that such rewards are beneficial in helping consumers manage inflation. The association continues to challenge any claims that yield-bearing stablecoins pose a threat to the traditional banking sector, insisting that the evidence does not support these assertions.

The FDIC has also taken steps to allow banks to issue stablecoins through subsidiaries, aligning with the proposal for regulatory frameworks considering evolving financial landscapes.

For more details, refer to the full letter available from the Blockchain Association at this link.