By Olga Kharif

Bank Groups Say Senate Stablecoin Rewards Proposal ‘Falls Short’. Bloomberg

(Bloomberg) -- Bank groups pushed back Monday on a crypto market structure proposal, escalating pressure on US lawmakers to continue negotiations over a key stablecoin rewards provision.

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Leading industry associations said the latest draft “falls short” despite Coinbase Global Inc. saying last week that a deal had been reached on the contentious issue of stablecoin yield. Democratic Senator Angela Alsobrooks also said earlier Monday that she believed they had “resolved” a dispute over the rewards.

At stake is whether stablecoins, paired with exchange-run reward programs, begin to function like yield-bearing cash accounts — a shift banks warn could draw deposits away from traditional lenders even if the funds remain within the broader financial system. Bank industry concerns over the latest rewards proposal are likely to further delay the sweeping crypto legislation, which has been stalled in the US Senate since Coinbase pulled its support in January.

The trade associations said one issue is the measure would allow crypto exchanges to pay interest for a user’s participation in an exchange’s membership program under certain conditions.

“This is a significant loophole that must be addressed,” said the groups, which included the American Bankers Association and Bank Policy Institute. The groups added they would be sharing “detailed suggestions” with lawmakers in the coming days.

Spokespeople for Coinbase and Alsobrooks didn’t immediately respond to requests for comment.

--With assistance from Steven T. Dennis.

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