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"Banks and crypto used to wage their regulatory battles behind closed doors. Not anymore. The fight is completely in the open now, and it's getting hairy. This time, the battle is about whether stablecoins can pay interest.
Banks say stablecoin yield will drain trillions from the financial system. Crypto says banks should compete on price, not regulation. It's a trillion-dollar fight over who gets to hold the American savings account in the 21st century.
If banks lose, they don't just lose customers. They lose the ability to create money through fractional reserve lending - and they're not about to take that sitting down."
~ Coin Bureau
The video discusses an intensifying regulatory battle between traditional banks and the crypto industry over a technical loophole in the Genius Act regarding stablecoin yields. While the law prevents stablecoin issuers from paying interest directly to holders to protect traditional savings accounts, crypto exchanges like Coinbase have found a workaround by passing treasury-backed rewards to users through third-party distribution. Banks argue that this regulatory arbitrage threatens the financial system by draining deposits from fractional reserve lending, which could lead to a massive contraction in available credit for mortgages and small businesses.
In contrast, the crypto industry maintains that these yields are a matter of consumer choice and market efficiency, arguing that banks are simply trying to protect a government-granted monopoly on interest. The conflict remains unresolved as lawmakers struggle to balance the safety of the banking sector with the innovative potential of digital dollars in a shifting macroeconomic landscape.
0:00 Intro
1:19 Background
4:14 Most Hated Yield
8:04 The Banks’ Case
14:21 Crypto vs. Yield Hoggers
Source - Coin Bureau YouTube: https://www.youtube.com/watch?v=9fPp4-PeyXo
Disclaimer: This video is provided for informational purposes only, and not offered or intended to be used as legal, tax, investment, financial, or any other advice.
