Multicoin Capital co-founder stated that the GENIUS Act, which focuses on stablecoins and took effect in July, will drive funds from traditional bank accounts to higher-yielding stablecoins.
Multicoin Capital co-founder and managing partner Tushar Jain posted on X on Saturday, saying, "The GENIUS Act marks the end of banks exploiting retail depositors with extremely low interest rates."
Jain added, "After the introduction of the GENIUS Act, I expect large tech giants with vast distribution channels (Meta, Google, Apple, etc.) to start competing with banks for retail deposits." He pointed out that these tech companies will offer higher stablecoin yields, better user experiences, instant settlements, and 24/7 payment services, surpassing traditional banks.
He also mentioned that banking groups attempted to "protect profits" in mid-August by urging regulators to close a so-called loophole to prevent stablecoin issuers from paying interest or yields on stablecoins through their affiliated companies.
The GENIUS Act prohibits stablecoin issuers from providing interest or yields to token holders but does not explicitly ban issuing yields through cryptocurrency exchanges or affiliated companies, which may allow issuers to circumvent the law through these partners.
U.S. banking groups are concerned that the widespread adoption of high-yield stablecoins could undermine the traditional banking system, which relies on absorbing deposits to support lending.
The U.S. Treasury estimated in April that large-scale stablecoin adoption could lead to an outflow of approximately $6.6 trillion in deposits from the traditional banking system.
The Bank Policy Institute stated in August, "The result will be an increased risk of deposit outflows, especially during periods of market stress, which will weaken the credit-creating capacity of the entire economy. Correspondingly, a reduction in credit supply means higher interest rates, fewer loans, and increased costs for Main Street businesses and households."
Multicoin Capital co-founder Tushar Jain stated that to remain competitive, "banks will have to pay higher interest to depositors," adding, "This will significantly impact their profitability."
Online payment platform Stripe CEO Patrick Collison stated last week that the average interest rate for U.S. savings accounts is 0.40%, while the average interest rate for European savings accounts is 0.25%.
On the lending platform Aave, the rates for Tether (USDT) and Circle's USDC are 4.02% and 3.69%, respectively, far exceeding traditional bank savings rates.
Jain bets that large tech companies will participate in the stablecoin space. Previously, Fortune reported in June that Apple, Google, Airbnb, and X are exploring issuing stablecoins to reduce costs and improve cross-border payments. No further progress has been reported yet.
According to CoinGecko data, the total market size for stablecoins is $308.3 billion, with USDT and USDC at $177 billion and $75.2 billion, respectively.
The Treasury predicts that by 2028, the market value of stablecoins will grow by 566%, reaching $2 trillion.
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Original article: “Multicoin Executives Say GENIUS Act May End Banks' Exploitation of Users”
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