Key Takeaways
- • Galaxy Digital CEO Mike Novogratz said on X that "We would be fools as a country to reverse the newly passed Genius Act," pushing back on renewed bank efforts to curb stablecoin rewards.
- • The American Bankers Association, writing to the U.S. Senate earlier the same week, argued that loopholes in the GENIUS Act could let crypto firms draw deposits away from community lenders, reducing lending to small businesses, farmers, students and homebuyers.
- • Coinbase Chief Policy Officer Faryar Shirzad said Congress already resolved the stablecoin issue in GENIUS and warned that reopening it would undermine confidence in U.S. digital dollar infrastructure.
- • Shirzad cited more than $360 billion in annual U.S. bank earnings from interest on reserves and card fees, framing bank opposition as competitive pressure rather than a credit-risk concern.
- • Galaxy Digital (GLXY) shares fell more than 2% in regular trading Wednesday before edging up 0.36% after hours, with retail sentiment on Stocktwits bearish.
Summary
Galaxy Digital CEO Mike Novogratz warned on Wednesday that reversing the GENIUS Act would be a strategic mistake for the United States, pushing back against renewed efforts by banks to curb stablecoin rewards. In a post on X, Novogratz wrote, "We would be fools as a country to reverse the newly passed Genius Act," and told banks to "toughen up and compete. This is what innovation looks like." His comments responded to remarks by Coinbase Chief Policy Officer Faryar Shirzad, who cautioned that reopening debate on the act would inject uncertainty into U.S. digital asset policy as stablecoin adoption ramps up globally.
The pushback follows a letter to the U.S. Senate from the American Bankers Association earlier in the week calling for clearer limits on stablecoin yield. The association argued that loopholes in the GENIUS Act could allow crypto firms to draw deposits away from local lenders, and that deposit outflows would reduce lending capacity for small businesses, farmers, students and homebuyers.
Shirzad argued that opposition from large banks reflects competitive pressure rather than actual risk. He cited data showing U.S. banks earn more than $360 billion annually from interest on reserves held at the Federal Reserve and from card transaction fees, and said stablecoin rewards threaten those margins by lowering payment costs and introducing competition rather than impairing banks' ability to lend. He also argued the debate extends to the dollar's global dominance, citing China's recently announced interest payments to users of its digital yuan as an example of how restricting U.S. stablecoin rewards could weaken the dollar's role in global commerce.
Market reaction was mixed. Galaxy Digital (GLXY) shares fell more than 2% in regular trading on Wednesday before edging 0.36% higher after hours, and retail sentiment on Stocktwits toward the company remained bearish over the past day. The broader crypto market was weaker, with total market capitalization down 1.8% in 24 hours to $3.2 trillion and Bitcoin dipping around 2% to below $91,000, according to Stocktwits data. Retail sentiment on Stocktwits was extremely bullish toward Bitcoin and bullish toward the stablecoins USDT and USDC.
The pushback follows a letter to the U.S. Senate from the American Bankers Association earlier in the week calling for clearer limits on stablecoin yield. The association argued that loopholes in the GENIUS Act could allow crypto firms to draw deposits away from local lenders, and that deposit outflows would reduce lending capacity for small businesses, farmers, students and homebuyers.
Shirzad argued that opposition from large banks reflects competitive pressure rather than actual risk. He cited data showing U.S. banks earn more than $360 billion annually from interest on reserves held at the Federal Reserve and from card transaction fees, and said stablecoin rewards threaten those margins by lowering payment costs and introducing competition rather than impairing banks' ability to lend. He also argued the debate extends to the dollar's global dominance, citing China's recently announced interest payments to users of its digital yuan as an example of how restricting U.S. stablecoin rewards could weaken the dollar's role in global commerce.
Market reaction was mixed. Galaxy Digital (GLXY) shares fell more than 2% in regular trading on Wednesday before edging 0.36% higher after hours, and retail sentiment on Stocktwits toward the company remained bearish over the past day. The broader crypto market was weaker, with total market capitalization down 1.8% in 24 hours to $3.2 trillion and Bitcoin dipping around 2% to below $91,000, according to Stocktwits data. Retail sentiment on Stocktwits was extremely bullish toward Bitcoin and bullish toward the stablecoins USDT and USDC.
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