$360 Billion in Banking Revenue at Risk as Congress Debates Stablecoin Rewards

U.S. banks have launched a renewed lobbying effort in Washington aimed at tightening the rules around stablecoin rewards, arguing that crypto-based incentives threaten the foundations of the traditional banking business.

According to industry groups, allowing digital dollar issuers to offer yield-like benefits could undermine revenue streams that have long been sustained by deposits and everyday payment activity.

Billions in banking revenue under pressure

At the heart of the dispute is a pool of income exceeding $360 billion per year. A large share comes from interchange fees, often referred to as swipe fees, which banks collect whenever consumers use credit cards. These charges, typically ranging between two and three percent per transaction, generate roughly $187 billion annually. Although some of that money funds cardholder rewards, merchants usually offset the expense by raising prices, spreading the cost across consumers.

Another major pillar is interest earned on reserves held at the Federal Reserve. U.S. banks collectively keep close to $3 trillion parked at the Fed, producing around $176 billion in relatively risk-free income. From the banking industry’s perspective, stablecoins that offer rewards or incentives tied to holding balances could lure funds away from deposits and erode this dependable source of profit.

Banks push Congress to close perceived gaps

The American Bankers Association, joined by more than fifty state-level banking organizations, has formally urged lawmakers to revisit how stablecoin rewards are defined in law. Their focus is the GENIUS Act, enacted in July 2025, which prohibits stablecoin issuers from paying interest, whether directly or indirectly.

Banking groups argue that, in practice, the rule is being diluted. Many crypto platforms have structured reward programs through affiliates or loyalty schemes, labeling them as incentives rather than interest. Under current interpretations, these arrangements can continue, something banks describe as an unfair workaround that allows crypto firms to compete for consumer balances without facing the same regulatory burdens.

To counter this, banks want Congress to add explicit language in upcoming market-structure legislation, making it clear that affiliate-based rewards fall under the same prohibition. They contend that failing to do so leaves regulated institutions at a disadvantage while exposing consumers to risks outside the traditional safety net.

Crypto firms warn of stifled competition

The crypto industry has pushed back forcefully. Companies such as Coinbase argue that banning rewards would mainly protect incumbent banking profits rather than benefit consumers. From their standpoint, incentives are a legitimate way to compete and encourage adoption, not a disguised form of interest.

Crypto executives also caution that stricter rules in the U.S. could have unintended consequences, driving innovation, capital, and talent to other jurisdictions where stablecoin issuers are permitted to offer yield. In their view, the debate is less about consumer protection and more about who controls everyday financial balances in a rapidly evolving payments landscape.

As lawmakers weigh potential changes, the fight over stablecoin rewards is shaping up as a broader contest between traditional finance and crypto, with hundreds of billions of dollars in annual revenue and the future of digital payments hanging in the balance.

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