Federal bank regulators have clarified that cryptocurrency companies can continue offering interest-like rewards to customers, despite concerns from traditional banks about potential deposit flight. The new rules, part of the GENIUS Act implemented last year, allow exchanges like Coinbase and Robinhood to pass along earnings from stablecoins to customers as rewards. However, stablecoin issuers such as Circle remain prohibited from paying interest directly to holders.
The decision comes amid a heated debate between the crypto industry and banks over the competitive advantage of stablecoin yields. For example, Coinbase offers up to 3.5% yield on USDC balances, significantly higher than the average 0.38% yield on traditional savings accounts. Banks argue that such high yields could lead customers to move their savings from banks to crypto, reducing lending capacity and potentially causing bank failures.
The American Bankers Association criticized the ruling, stating it threatens the funds banks use for lending. Consumer advocacy groups also expressed concerns, noting the lack of deposit insurance in the crypto world. Phillip Basil of Better Markets called the rule a 'free pass' for stablecoin issuers to operate like banks without the same protections.
The Office of the Comptroller of the Currency stated that exchanges can offer these rewards on a 'case-by-case basis,' rejecting calls for stricter restrictions. The ruling maintains the status quo for crypto platforms, despite Congress's intent to protect local lending.