The Bank Policy Institute (BPI), along with other major banking groups involved, has published a letter addressed to US Congress highlighting its disapproval on stablecoin yields.
The letter touches on the idea that the industry has permitted yields to be paid out indirectly by prominent platforms in the form of stablecoin rewards or points allocated to users based on engagement and user spending – calling it a ‘loophole’.
In essence, the letter claims that up to $6.6 trillion in deposit outflows could be at risk from traditional banks and financial institutions offering banking services to clients and small business, focusing on the cost it will bring with services in the lending and borrowing sectors to be harmed the most.
The institute makes reference to the contrast between payment utility of stablecoins vs. acting as bank deposits or money market funds. Earlier, J.P. Morgan revealed its JPMD pilot – a proof-of-concept featuring deposit tokens.
While stablecoin issuers themselves are restricted from doing so, it is felt that actors with distribution channels are utilising points or rewards in a similar same way, such as large crypto exchanges. The industry views yields and points or rewards as separate incentives.
For those who followed the Senate, House voting procedures of the GENIUS Act from March 2025 to its July signing by President Trump, such remarks are quite familiar, having been used as one of the strongest opposing arguments to derail the progress of the digital asset industry in the US.
