Former Senator Pat Toomey, a one-time ranking member of the Senate Banking Committee, took to the Financial Times to lambast his former colleagues’ decision to defer to pressure from bank lobbyists rather than consumers.
Toomey states:
“When an industry asks the government for protection from competition, consumers should beware. At a moment when America’s closest competitor is making strides in digital asset technology, some US banks are pushing Congress in the opposite direction. Banks are lobbying to rewrite the Genius Act to block stablecoin holders being paid interest.”
Toomey noted the obvious that banks simply want to protect their profit margins at the expense of their customers.
He also challenged the thesis that stablecoins, which are allowed to generate interest for their holders, don’t hold up to scrutiny. At the moment, bank deposits stand at around $18.5 trillion, and stablecoin issuance at only $300 billion.
The choice is between protecting banks and “protecting America’s competitive edge.”
Fireblocks Director of Policy Dea Markoca jumps into the conversation, adding that deposit-holding institutions are looking into stablecoins and will thus be able to compete on a level playing field.
Meanwhile, Shanaka Anslem Perera shamed traditional banks, describing the draft legislation as “a $6.6 trillion protection bill.”
“Banks pay depositors 0.1% interest. Stablecoin issuers hold Treasury bills earning 4.5%. If stablecoins could pass that yield to users, banks lose the deposit war. They cannot compete. The math is fatal. So they made competition illegal.”
He went on to explain that digital asset firms got screwed as banks received a guarantee that “$6.6 trillion in deposits will be protected at any cost.”
So will Congress do the right thing and side with innovation and the broader public? It is hard to tell, as bank lobbyists have been working the hallways of Congress to get their way and crush competition.
