In the lead-up to the potential passage of the crypto market structure bill, known as the CLARITY Act, Faryar Shirzad, Chief Policy Officer at Coinbase, shed light on the ongoing discussions surrounding key provisions of the already enacted GENIUS Act. 

Shirzad noted that the stablecoin rewards provisions of the GENIUS Act are currently a central topic of debate among lawmakers. Shiraz remarked, “reopening it now only creates uncertainty and risks the future of the US Dollar as commerce moves onchain.”

Shirzad emphasized the importance of protecting the GENIUS Act, arguing that rewards benefit consumers without adversely affecting community banks.

He alleged that the motivation behind banks’ opposition to stablecoin rewards is evident. He claimed that US banks currently generate approximately $176 billion annually from the $3 trillion they hold at the Federal Reserve (Fed) and another $187 billion from card swipe fees, which averages to nearly $1,440 for each household. 

This results in over $360 billion yearly from payments and deposits, in addition to substantial unused lending capacity, as the Federal Reserve incentivizes banks to maintain reserves rather than deploy them.

According to Shirzad, stablecoin rewards pose a challenge to these financial margins—not by impeding banks’ ability to lend, but by introducing real competition in payment systems. 

Shirzad further expressed alarm at how, during these Senate discussions, China has recognized the opportunity presented by the bank lobby. 

The country has recently announced interest payments to users of its Digital Yuan, aiming to undermine the supremacy of the US dollar. He warned that banning rewards in the Senate would inadvertently aid China’s efforts to challenge the dollar’s dominance.

Concluding his remarks, Shirzad asserted that the opposition from banks toward stablecoin rewards is not based on prudential concerns but stems from a desire to protect lucrative revenue streams threatened by competition. 

John E. Deaton — attorney for XRP holders in the US Securities and Exchange Commission’s (SEC) lawsuit against Ripple Labs and a former Senate candidate — also reacted to these developments. He emphasized the importance of the situation as China officially began offering interest on the digital yuan. 

He highlighted that the American Bankers Association (ABA) is exerting pressure on the Senate to close a “third-party loophole” in the GENIUS Act, which would restrict companies like Coinbase (COIN) and Kraken from offering rewards to consumers.

Deaton argued that banning American firms from providing yield to everyday citizens does not protect banks, as claimed by the ABA; rather, it risks forcing global reliance on China’s currency over the US dollar. 

He emphasized that major banks are threatened by the concept of digital dollars because they are unable to “rent” that money back to consumers if individuals are earning yield themselves.

The criticism also extended to banking officials, with Deaton asserting that the Banking Policy Institute, led by figures like Jamie Dimon, has crafted an anti-crypto bill last year that undermines the interests of average Americans. 

He contended that if the Senate capitulates to the bank lobby, it effectively imposes a hidden tax on retail investors and customers nationwide to safeguard Wall Street’s profits.

Featured image from DALL-E, chart from TradingView.com 

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