Crypto Industry Fights Bank Lobby Over Genius Act Rewrite
Key Takeaways
Banking groups seek stricter rules – The American Bankers Association and state banking associations are pushing for amendments to the GENIUS Act to give banks greater control over stablecoin issuance and custody services.
Crypto groups push back—The Crypto Council for Innovation and Blockchain Association sent a joint letter to the Senate Banking Committee urging lawmakers to reject the bankers’ proposals, warning that they would stifle innovation and competition.
Innovation and competition at stake – Industry advocates argue that favouring banks in digital asset regulation could slow US innovation, drive startups overseas, and weaken America’s position in the global crypto economy.
The US cryptocurrency sector is clashing with prominent banking lobbyists over proposed changes to the newly introduced GENIUS Act, legislation designed to provide clear rules for digital assets.
Overview
On Tuesday, the Crypto Council for Innovation (CCI) and the Blockchain Association sent a joint letter to the Senate Banking Committee, calling on lawmakers to dismiss proposals the American Bankers Association (ABA) and state banking associations put forward.
Crypto industry groups argue that the banking sector is attempting to water down key provisions to maintain its dominance in financial services, sparking fresh debate over the future of innovation and competition in US markets.
Banking Lobby Moves to Rewrite the Rules
The GENIUS Act—formally known as the Guaranteeing Essential New Innovation for United States Act—was introduced in Congress earlier this year to establish a regulatory framework for digital assets. Crypto advocates have praised the legislation as a potential breakthrough in bringing legal clarity to a fragmented system. However, the banking lobby has recently mobilised to amend the bill, arguing that the current draft does not sufficiently address financial stability risks.
Proposed rewrites would impose stricter capital and reserve requirements on stablecoin issuers, limit non-bank entities from offering custody services, and expand the oversight role of traditional banks. Critics from the digital asset industry say these changes would essentially hand control of the sector to legacy financial institutions, limiting the role of innovative fintech firms and crypto-native companies.
“The GENIUS Act was supposed to be about fostering innovation and competition,”
said one crypto advocacy spokesperson.
“The banking industry’s push to rewrite it is nothing more than an attempt to protect their monopoly.”
Crypto Groups Push Back Against Bank Influence
Crypto lobbying groups, including the Blockchain Association and Chamber of Digital Commerce, have voiced strong opposition to the bankers’ push. They argue that rewriting the legislation to favour incumbents would choke off competition and prevent new entrants from offering services that consumers want.
“Digital assets can revolutionise payments, lending, and capital formation, but only if startups and innovators are allowed to participate on a level playing field,”
the Blockchain Association stated.
“The banking sector already has enormous structural advantages, and layering new restrictions on non-bank crypto firms would entrench that power even further.”
Industry advocates also warn that giving banks exclusive rights to custody and stablecoin issuance could stifle US leadership in the global digital asset race. Other jurisdictions—such as the European Union, which has a Markets in Crypto-Assets (MiCA) framework—are quickly integrating digital assets into mainstream finance. If the US tilts its regulations toward traditional institutions, critics say, it risks losing talent, capital, and innovation to overseas markets.
Crypto groups are now rallying lawmakers to resist what they describe as a
“banker-led rewrite”
of the GENIUS Act. They are calling for Congress to keep the bill’s original intent intact: ensuring clear, balanced rules that give both banks and fintech firms space to operate.
What’s at Stake for Innovation and Consumers
At the heart of the dispute is a broader question of who should control the future of money. Banks argue that their decades of experience managing risk and safeguarding customer funds make them the logical stewards of digital asset infrastructure. However, crypto advocates counter that many of the sector’s most significant breakthroughs—such as blockchain-based payments, decentralised finance, and tokenised assets—have come from outside the banking system.
The outcome could shape consumers’ access to cheaper, faster, and more inclusive financial services. If banks succeed in securing greater control over stablecoins and digital custody, critics say, innovation could slow, fees could rise, and competition could wither. On the other hand, lawmakers sympathetic to the banks’ position argue that strict oversight is necessary to prevent financial instability and protect investors in a fast-evolving market.
The battle over the GENIUS Act will likely intensify as the bill moves through Congress. Crypto industry groups are stepping up lobbying efforts, urging lawmakers to resist pressure from banking giants. Whether the legislation emerges as a balanced framework or a bank-dominated regime could determine the trajectory of America’s digital asset ecosystem for years to come.