A pivotal Senate Banking Committee vote next week could move the U.S. closer to establishing long-awaited crypto regulations amid heightened concerns from banks that stablecoins may disrupt traditional deposit systems.
Senate Stablecoin Legislation Advances Amid Industry Divide
A major crypto market structure bill is scheduled for an initial vote on May 14 before the Senate Banking Committee, CNBC reported.
Senate Banking Committee Chairman Tim Scott (R-S.C.) has pushed to secure full Republican backing for the legislation.
However, Democratic support remains uncertain due to unresolved disputes, including provisions aimed at restricting politicians from profiting off digital assets.
Banks Warn Stablecoin Rewards Could Threaten Deposits
Commercial and community banking groups continue to oppose the bill, arguing that the proposed language governing stablecoin rewards remains too similar to interest-bearing savings accounts.
Banks fear stablecoin issuers offering user incentives could divert consumer funds away from traditional deposits, potentially weakening a core funding source for the banking system.
Crypto Industry Gains Ground With Compromise Proposal
Crypto firms, including Coinbase (NASDAQ:COIN), have largely backed the updated bill after Sens. Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) introduced revised provisions outlining how companies can provide stablecoin rewards without directly competing with bank deposit yields.
Stablecoins are digital currencies pegged to reserve assets such as the U.S. dollar to maintain consistent value.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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