The American Bankers Association (ABA) Community Bankers Committee recently sent a letter to the Senate, urging that the upcoming "Crypto Market Structure Act" close the loophole allowing stablecoins to indirectly pay interest through exchanges. This battle over $6.6 trillion in deposits is stirring up a wave of regulatory concerns in Washington's financial circles.

The "GENIUS Act" passed last year was initially seen by the industry as a balancing point between traditional finance and crypto assets. The bill explicitly prohibits stablecoin issuers from paying interest directly to holders, aiming to protect the competitiveness of bank savings accounts. It sounds quite strict, but the reality quickly changed.

Before the year is even half over, ABA has already found that money is still flowing out. According to a letter submitted to the Senate, leading exchanges like Coinbase and Kraken have found legal loopholes—they use the term "Rewards" to directly return Treasury yields to users. On the surface, the word "interest" doesn't appear, but the money flowing into user accounts is the same. Bankers pointed out sharply in their letter:

"These operations allow exceptions to swallow the rules, rendering the ban ineffective."

For ordinary investors, no matter what you call it, as long as money is credited, it’s attractive. Stablecoins can serve as deposits and can be transferred on-chain for withdrawal at any time. This flexibility combined with high yields is something traditional banks simply can't match. With quick liquidity and decent returns, who would want to lock their money in a bank account?

This impact on community banks is even greater. The Treasury Department estimates that if indirect interest payments continue to spread, the insured banking system in the U.S. could lose $6.6 trillion in deposits. For big Wall Street institutions, this might just be a number shift on the financial statements; but for small and medium-sized banks across the country, it’s a matter of survival. Once there is a large-scale outflow of deposits, the operational pressure on community banks will skyrocket, potentially leading to closures.