Key Highlights
- Keeping stablecoin rewards protects consumer choice, fuels competition, and supports innovation without adding risks to the financial system.
- Evidence shows rewards don’t threaten banks, suggesting critics aim to protect old revenue models, not consumer safety or stability.
- Reopening debates on rewards now could create uncertainty, slow adoption, and weaken the GENIUS Act’s carefully balanced framework.
The Blockchain Association, a U.S. crypto advocacy group, is urging Congress to reject efforts to expand restrictions on stablecoin rewards. In a letter addressed to the Senate Banking Committee, the organization, joined by over 125 industry groups and companies, argued that limiting lawful incentives would disrupt the balance struck by the GENIUS Act.
As per the letter, the coalition emphasized that restricting third-party platforms from offering rewards could reduce consumer choice, slow innovation, and inject unnecessary uncertainty into the law. The GENIUS Act, signed by the U.S. President Donald Trump on July 18, 2025, regulates stablecoins pegged 1:1 to the U.S. dollar.
The legislation prohibits stablecoin issuers from paying interest to holders but explicitly allows intermediaries and crypto platforms to provide lawful rewards. “A possible reinterpretation or hardening of these provisions could jeopardize a balance that has been laboriously reached in order to favor competition, as well as, of course, protect consumers,” the Blockchain Association warned.
The coalition emphasizes economic data
A criticism of rewards in stablecoins is that rewards could pose a threat to community banks or limit lending. The coalition, however, presented the findings of an analysis by Charles River Associates from 2019 to 2025 that did not observe any withdrawal in deposits from the community banks.
Moreover, the letter noted that U.S. banks hold around $2.9 trillion in reserves at the Federal Reserve, earning interest. According to the signatories, concerns about rewards reflect protection of existing revenue models rather than genuine safety risks.
Lindsay Fraser, Chief Policy Officer at the Blockchain Association, highlighted the stakes in a post on X, “125+ organizations and companies are aligned: rolling back lawful stablecoin rewards would take money out of consumers’ pockets, reduce choice, and suppress competition.” Fraser also emphasized that the GENIUS Act already balances innovation and consumer protection.
Stablecoin rewards support competition and innovation
The coalition explained that the key to competition in the industry is the use of rewards, which enable new means of payment to compete with the existing ones. Rewarding the use of new means of payment can have the benefit of speeding up settlement and lowering the cost of transactions.
Moreover, the organizations suggested that opening debates about rewards before the full implementation of the GENIUS Act could create uncertainty with regard to the predictability of the market. This could be harmful to the bipartisan support that would be needed to establish legislation related to digital assets.
Engagement and dialogue with the regulatory community
The Blockchain Association is also actively interacting with the regulators. On August 27, the Crypto Task Force of the Securities and Exchange Commission (SEC) held a meeting with the Blockchain Association, Multicoin Capital Management, Blockchain Capital, and Sullivan & Cromwell LLP. They discussed the regulatory aspects of custody requirements for investment advisers and tokenization.
The group emphasized that the existing framework, intended for traditional securities, creates complexities for crypto-companies. Therefore, they demanded a structure that facilitates crypto-related advisory work without any hurdles.
The attendees consisted of CEO Summer Mersinger, Senior Counsel Laura Sanders, and legal counsel for the firms. The aim was to make them understand the dynamic nature of regulatory techniques in crypto. Another individual, Fraser, said that the process of creating policy requires education and building a coalition.
Stablecoin market hits $310B in 2025
Notably, stablecoins registered significant growth in 2025, with the aggregate market value amounting to around $310 billion, up by $103 billion or 50.2% from the previous year. According to analyst CryptoDep, “Over the year, the total stablecoin market capitalization rose to approximately $310B, increasing by $103B, which represents a 50.2% year-over-year gain.”
Although market leaders Tether and Circle dominated in the market, other stablecoins also witnessed significant growth in this sector. CryptoDep further said that apart from major players in this market notable supply growth was also recorded by USDS, USDe, RLUSD, and USD1. The current stablecoin market cap stands at $309 billion as of writing, as per DeFiLlama.
Keeping stablecoin rewards legal helps people have more options, supports healthy competition, and keeps innovation alive. Trying to limit these rewards could upset the balance set by the GENIUS Act and slow down the U.S. from leading in digital finance.
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