U.S. Banking Groups Push for GENIUS Act Reforms to Clarify Stablecoin Rules

U.S. banking groups, including the American Bankers Association, are advocating for legislative reforms to the GENIUS Act, a key piece of federal legislation aimed at regulating stablecoins. The proposed changes seek to clarify regulatory standards and address uncertainties that have hindered institutional participation in the digital asset space [1]. This move reflects a growing recognition among financial institutions that a more coherent and stable regulatory framework is essential to support the responsible growth of the crypto market [2].

The coalition includes major trade associations and consumer advocacy groups, which collectively argue that the current structure of the GENIUS Act may inadvertently create regulatory loopholes, allowing stablecoin issuers to operate with less oversight than intended [3]. On August 12, a group of banking trade associations formally wrote to Congress, urging lawmakers to refine the legislation to ensure consistent regulatory standards and prevent market distortions [4].

Regulatory clarity is expected to facilitate greater institutional engagement with stablecoins and other digital assets. The Federal Reserve and FDIC are among the key regulators that could play a pivotal role in easing restrictions, thereby opening new avenues for banks to expand their crypto-related services [5]. Analysts predict that this regulatory shift may boost confidence in the crypto market, potentially benefiting sectors such as DeFi protocols and major cryptocurrencies like ETH and BTC [6].

The reform efforts align with broader regulatory initiatives under the Trump administration, which has emphasized the importance of modernizing bank capital rules to reflect the actual risks associated with digital assets [7]. The administration's report also highlights the need to preserve the dominance of the U.S. dollar while supporting the growth of private stablecoins, rejecting the idea of a Central Bank Digital Currency.

Citigroup, among other major banks, is exploring opportunities in the evolving crypto landscape, including stablecoin custody and payment services [8]. The interest shown by traditional financial institutions underscores a broader trend of adaptation to the digital asset ecosystem, driven by the prospect of regulatory clarity and market expansion.

The coalition also supports the introduction of regulatory safe harbors and pilot programs to encourage innovation in crypto-related services such as custody and trading [9]. These proposals aim to reduce legal and operational uncertainties, enabling banks and credit unions to engage more confidently with digital assets.

As stablecoin usage and digital asset adoption continue to rise, the demand for a balanced and adaptive regulatory framework becomes increasingly urgent. The campaign for reform highlights the ongoing tension between promoting financial innovation and ensuring consumer protection, a central theme in the evolving debate over the future of digital finance in the U.S.

Source:

[1] Wall Street Joins Consumer Advocates to Call for Edit to ... (https://www.coindesk.com/policy/2025/08/14/wall-street-joins-consumer-advocates-to-call-for-edit-to-genius-act-on-stablecoins)

[2] Banks, consumer groups fret GENIUS loophole (https://punchbowl.news/article/vault/coalition-fret-genius/)

[3] Trade Groups Urge Congress to Address GENIUS Act ... (https://www.consumerfinanceandfintechblog.com/2025/08/trade-groups-urge-congress-to-address-genius-act-loopholes/)

[4] President's Working Group Urges Swift Crypto Regulatory ... (https://natlawreview.com/article/presidents-working-group-report-lays-foundation-us-crypto-market-structure)

[5] Digital Asset Regulatory Recommendations (https://www.americascreditunions.org/blogs/compliance/digital-asset-regulatory-recommendations)

[8] Citigroup considers custody and payment services for ... (https://www.reuters.com/business/finance/citigroup-considers-custody-payment-services-stablecoins-crypto-etfs-2025-08-14/)

[9] US Banking Groups Call for Stability Reforms in Crypto Law (https://intellectia.ai/news/crypto/us-banking-groups-call-for-stability-reforms-in-crypto-law)