The Battle Over Stablecoin Interest: Banks vs. Crypto Exchanges

While Trapine Defi are increasingly working together, there's still room for butting heads.

While banks in the US led by groups like Bank Policy Institute and the American Bankers Association are lobbying the Treasury Department to impose a blanket ban on staplecoin interest payments.

Joining me to weigh in is Gareth. head of multimedia for Coin Telegraph.

Happy Friday, Garret.

Thanks for joining us.

Well, the Treasury Department is preparing to finalize rules from the Genius Act, but there's this battle between banks and crypto exchanges over stablecoin interest payments.

So tell us about this and what you make of it.

Yeah, sure.

So, um, obviously the US Department of Treasury is facing a lot of conflicting feedback from different cryptocurrency companies.

I mean, I think that there are various vested interests in the industry for for certain parts of the Genius Act which will obviously lay down some very solid.

Uh, rules or playing rules for stablecoins in general and Coinbase earlier this week urged the Treasury to limit this ban on stablecoin interest payments exclusively to stablecoin issuers, and it said that while allowing it for non-issuers such as crypto exchanges, that wouldn't be great.

So, yeah, essentially they're, they're turning around here and uh making it clear that they don't want to ban, um, you know, on stablecoin uh interest payments for issuers only.

Um, they, they want to allow it for non-issuers, which basically means that anyone who has stablecoins that, uh, wants to, uh, stake them.

I, um, you know, pledge them as collateral or earn and then earn interest on them, should be able to do so.

And I think that the real conflict of interest here is between the cryptocurrency industry in general at large, and of course traditional financial institutions, i.e. banks, who might be seeing that the cryptocurrency industry is trying to come in and take their lunch money.

Of course, banks, you know, this is a big part of their, their business is.

Lending money and making interest on that.

And if we can all just use stablecoins and do it ourselves through DI protocols and you know, put down a lot of money and earn interest on that, why do we need a bank?

And obviously we would all love to take a lot more control of our money, but the traditional financial system is trying to come to grips with the reality of this infrastructure actually being there and working now and everyone trying to come to some sort of agreement about the rules in which We can use stablecoins and what that will look like going forward.

So it's been a very interesting conversation so far.

And to be honest, I do think we'll find a middle ground here, um, but obviously, you know, it's, it's important that players like Coinbase are going out to bat for the wider industry and, you know, the individual on the street that might be holding stablecoins and, and wants to earn interest on them.

You should be able to, the technology allows you to, it's just a case of conflicted interests and trying to figure out, uh, who we should be listening and who we should be allowing to do what.

And Gareth, last but not least, we have time for just one question and about 60 seconds here.

So crypto price action has been disappointing, to say the least.

So Bitcoin fell below 100,000 multiple times this week.

So what do you make of this and will it have an impact on Bitcoin's sentiment in the long term?

Yes, I mean, I know we, we're short on time, so, so very briefly, I think it is a little bit disappointing to see Bitcoin finally test and drop below $100,000 a couple of times this week for the first time in a few months.

I'm not surprised.

I think there's been a lot of different macro factors that are playing in here.

The US government shut down.

Uh, you know, recent big downturns in the market that cataclysmic, um, uh, you know, event we had a few weeks ago.

So I think the overall short term sentiment has been a bit bearish for Bitcoin.

Um, am I bearish in the long term sentiment?

No.

Um, but it is going to be very interesting to see the price action for Bitcoin in the next few weeks and months and what 2026 holds.

I think if you go and read, uh, you know, um, Arthur Hayes and a few other people's thoughts on the markets, they're predicting, you know, a million, a million dollars for Bitcoin by 2028, 2030, uh, due to monetary printing or, you know, monetary policy in the United States, primarily being the driving factor there, and then of course just big institutional interests.

So I think the long term. outlook is pretty good, but obviously these short term drops in prices are quite concerning, and to be honest, I think any high, you know, price predictions for Bitcoin by the end of 2025 are kind of out the window now and you know the likes of Galaxy and a few others.

OK, Gareth, we will have to leave it there for today, so thank you so much for joining us today.