TD Cowen analyst Jaret Seiberg assigns a 10% probability to Congress enacting a ban on stablecoin yield over the next two years, despite renewed bank efforts to restrict platforms from paying rewards on dollar-pegged stablecoin holdings.
Banks plan to push for the ban in the next Congress, betting that Democratic gains after the midterm elections create an opening. The issue centers on whether exchanges and other platforms can offer yield or rewards to users holding stablecoins. Seiberg identified a "narrow path" for passage, noting it may be easier to find 60 Senate votes for a yield-only ban than for the broader crypto market structure bill, which failed a cloture vote 49-50 on Sept. 15.
Seiberg pointed to shifts in Senate composition. Sen. Elizabeth Warren is likely to chair the Banking Committee, and Sen. Sherrod Brown retained his Ohio seat despite crypto-backed spending of roughly $64 million against him. However, he cautioned that Democratic divisions make passage unlikely. Some Democrats will resist isolating stablecoin yield from a broader package, and Sen. Angela Alsobrooks, a lead Democrat on crypto policy, has distinguished between rewards for using stablecoins versus passively holding them. Congress also faces optics challenges: voters can earn returns on savings accounts and money market funds, making a ban vulnerable to framing as taking money from retail investors.
The fight stems from the GENIUS Act, signed into law on July 18, 2025, which bars payment stablecoin issuers from paying interest or yield solely for holding stablecoins. The statute does not explicitly cover exchanges and intermediaries, which banks call a loophole. The American Bankers Association and state bankers associations have urged Congress to close it. The OCC's final GENIUS rules, effective in January 2027, left third-party rewards for case-by-case review after banks sought a definitive ban.