US lawmakers are debating last-minute changes to the GENIUS Act after banking groups urged Congress to ban third-party rewards on stablecoins. The push came when the stablecoin supply surpassed $316 billion, a sign that everyday users already rely on dollar-pegged tokens for payments and savings. The battle boils down to a larger theme: who controls digital dollars as crypto moves closer to mainstream finance.
Stablecoins like USDC and USDT have held on to $1, but policy noise has affected crypto stocks and DeFi tokens tied to on-chain yields. Traders read the debate as a warning that Washington is still holding the steering wheel. The law, not the price charts, set the tone.
The GENIUS Act has already become law in June 2025, giving the US its first legal document for stablecoins. Now the banks want stricter language. That change has reignited fears that everyday users are losing out while big institutions keep their edge.
JUST IN: Stablecoin volume to hit $33 TRILLION by 2025 as GENIUS Act accelerates adoption pic.twitter.com/jIYXmIdsnE
– Radar 𝘸 Archie🚨 (@RadarHits) January 8, 2026
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What is the GENIUS rule, in plain English?
The GENIUS Act sets the ground rules for stablecoins. Think of a stablecoin as a digital dollar that resides on the blockchain, similar to cash in a test app but without a bank in between. The law says issuers must hold real dollars and follow strict guidelines.
The law prohibits issuers from paying interest directly. Crypto platforms still reward users for sharing trading fees or lending returns. The banks now want Congress to block that option as well.
Why does this matter to you? Because stablecoin rewards often beat bank savings accounts that pay almost zero. For beginners, this is one of the safest ways to earn crypto.
Why Are Crypto Masters Calling This A Big Deal?
Industry groups say banks fear competition, not risk. Lawmakers designed the bill to balance safety and innovation.
John Deaton, a pro‑crypto advocate, has warned that banning rewards is pushing users away from China’s digital yuan, which already pays interest. He called this idea a national security trap. His point is simple. If US digital dollars can’t compete, users look elsewhere.
The Blockchain Association echoed that view, saying there is no evidence that stablecoins weaken banks. Rather, the rewards benefit the common people, not those in great positions.
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How Can This Affect Your Money?
(Source: Stablecoins All Time High By 2026 / DefiLlama)
If Congress sides with the banks, stablecoins are starting to look like checking accounts without benefits. That slows adoption and attacks DeFi applications that rely on stablecoin liquidity. Less income means fewer opportunities and higher costs.
On the other hand, strict rules may attract cautious users who want clear protection. Stablecoin supply jumped nearly 7% after the law was passed. Clarity attracts money.
For starters, trade-offs are real. Security is increasing. The earning power is declining.
What Risks Does Everyone Ignore?
There were 98 major new Yield Bearing Stablecoins launched in 2025 pic.twitter.com/rsBBo0sY0t
– stablewatch (@stablewatchHQ) January 8, 2026
Stablecoin rewards are not free money. Platforms earn profit by lending or trading. That carries risks if markets freeze or borrowers default. Regulators worry users treat rewards like insured bank interest. They are not the same.
This is where caution is important. Never park rent on productive products. Even dollar-pegged tokens can break through a major depression.
Still, the push for a prize ban tilts the field in favor of the banks. Crypto leaders say that choice is shaping the future of digital dollars.
Congress is now deciding whether stablecoins remain competitive or become digital currencies with the brakes on. That choice comes as global demand for dollar tokens continues to rise.
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