When competition exists, consumers are the winners.

Author: Summer Mersinger

Translation: Deep Tide TechFlow

Traditional financial institutions should actively embrace competition rather than suppress emerging companies through anti-innovation regulatory measures, said Summer K. Mersinger, CEO of the Blockchain Association.

Healthy competition can drive innovation and provide consumers with higher quality products, which is at the core of America's economic leadership. Unfortunately, with the bipartisan-supported GENIUS Act officially signed into law, many traditional financial institutions seem to be wavering on the innovations that stablecoins bring to the financial market.

Bank lobbying groups and public affairs teams continuously voice complaints to Congress regarding the bill, urging lawmakers to reopen discussions and amend the legislation to ensure that the stablecoin market does not grow too quickly, thereby protecting bank profits and limiting consumer choices.

This reaction is both exaggerated and unnecessary. What traditional financial institutions should truly do is embrace competition and launch innovative products and services that consumers genuinely need, rather than suppressing emerging companies through anti-innovation rules and regulations.

The GENIUS Act is carefully designed through comprehensive bipartisan cooperation to strengthen consumer protection measures, ensure regulatory oversight, and maintain financial stability. Efforts to repeal its provisions are more about protecting entrenched banking interests than safeguarding household interests. This competition helps ensure that the U.S. banking system remains the strongest and most innovative in the world.

Critics warn that allowing stablecoins to offer rewards could lead to a massive outflow of deposits from community banks, even mentioning figures as high as $6.6 trillion. However, further analysis indicates that there is no statistically significant relationship between stablecoin adoption and the outflow of community bank deposits. In fact, the vast majority of stablecoin reserves remain within the traditional financial system—either held in commercial bank accounts or invested in short-term government bonds—these reserves continue to support broader liquidity and credit in the U.S. economy. Those alarming estimates rely on unrealistic assumptions that every dollar of stablecoin issuance will permanently leave the banking system.

Stablecoins do not siphon resources from lending activities. In fact, according to a report from the Treasury Department, their growth may increase the inflow of U.S. money supply over time. This means that Americans can enjoy a modern, programmable digital dollar without threatening the availability of credit within communities.

Others are calling for the repeal of Section 16(d) of the GENIUS Act, which allows subsidiaries of state-chartered institutions to conduct stablecoin business across state lines without additional licensing. If this important provision is repealed, it would lead to a fragmented and ineffective regulatory system, stifling interstate commerce.

Innovation has always been the lifeblood of American capitalism—it is the distinction between a dynamic market economy and a stagnant protectionist economy. Banks should not attempt to crowd out new market participants but should strive to ensure that current and future customers have access to cutting-edge products and services, including healthier deposit account rates.

Despite the Federal Reserve's current target interest rate exceeding 4%, the average yield on checking accounts is only 0.07%, and savings accounts yield 0.39%. This gap does not reflect consumer protection but rather the value captured by banks. In contrast, stablecoin reward programs allow platforms to compete directly for customers, thereby forcing traditional institutions to offer better value.

When competition exists, consumers are the winners.

The GENIUS Act positions the U.S. as a global leader in digital finance while maintaining the strongest consumer protections. Congress has addressed these issues through meticulous bipartisan review. The law requires reserves to be held one-to-one in cash or government bonds, implements strict licensing and oversight, and provides transparency far exceeding that of traditional deposits. Reopening discussions on these issues now would undermine consensus and threaten America's leadership in the digital finance space.

Stablecoins are not a loophole but an innovation that brings competitive benefits to consumers while protecting the stability of the banking system. Policymakers should see through this fearmongering and uphold the balanced, bipartisan framework that Congress has established.

Innovation and competition have created America's financial leadership. Now is the time to let it work again—do not let vested interests hinder its promising growth. American consumers deserve more choices.

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