TL;DR:
State chapter presidents of Stand With Crypto sent a letter this week to members of the Senate Banking Committee demanding protections for decentralized finance (DeFi) and the preservation of the ability to offer rewards on stablecoins on exchanges. The organization, backed by Coinbase, warned that eliminating or diluting those protections would send a negative signal about Congress’s interest in retaining financial innovation within the United States.
The Senate is moving cautiously toward comprehensive crypto market legislation. One of the main points of contention is the treatment of stablecoin rewards, an issue that surfaced during the debate over the GENIUS Act, passed last July. That legislation prohibits stablecoin issuers from paying direct interest to their users, but does not prevent third-party platforms, such as Coinbase, from offering rewards.
Banks argue that allowing yield generation will drain deposits from traditional institutions and hurt community banks. Crypto companies, for their part, maintain that restricting them would stifle innovation and that the discussion was already settled during consideration of the GENIUS Act. The White House organized meetings in recent weeks to attempt an agreement between the parties, but no concrete results have emerged so far.
The second front is DeFi. The crypto market structure legislation passed by the House of Representatives last year included the Blockchain Regulatory Certainty Act, a provision establishing that software developers who do not control user funds are not considered money transmitters.
Some Democratic senators on the Banking Committee put forward an alternative proposal late last year that would expand the definition of intermediary to anyone who designs, deploys, controls, or operates a front-end service for a DeFi protocol, or who materially benefits from one. The proposal drew sharp criticism from the industry.
“Omitting or diluting the BRCA sends a clear signal in the opposite direction — that Congress has no interest in having this innovation happen here,” the presidents stated in the letter. Stand With Crypto has also strengthened its influence at the state level, publishing a voter guide in Illinois ahead of Tuesday’s primaries, in which it outlines candidates’ positions on digital assets based on its own legislative tracking record.
