Five major banking trade groups issued a joint statement opposing the compromise barely hours after its release.
Circle Internet Group’s stock jumped nearly 20% on Monday after two US senators announced a bipartisan compromise on one of the most contentious issues holding up federal crypto legislation.
The deal, months in the making, drew loud opposition from the banking industry within hours of its release.
Lawmakers Push Stablecoin Compromise Despite Bank Resistance
In posts published on X on May 5, Senator Thom Tillis said he and Senator Angela Alsobrooks had reached a “consensus-based product” after working with industry stakeholders for months. According to Tillis, the agreement directly addresses one of the banking sector’s biggest concerns: deposit flight.
“Our compromise prohibits stablecoin rewards from resembling interest on bank deposits,” Tillis wrote, adding that banks had been “at the table” throughout negotiations.
At the same time, the proposal still allows crypto companies to offer alternative customer rewards, a concession that keeps parts of the existing business model intact.
The banking industry disagreed. A joint statement from the American Bankers Association, the Bank Policy Institute, the Consumer Bankers Association, the Financial Services Forum, and the Independent Community Bankers of America said the senators were “seeking to achieve the correct policy goal” but that the proposed language “falls short.”
The group cited research suggesting yield-bearing stablecoins could reduce consumer, small-business, and farm loans by one-fifth or more and pledged to send detailed suggestions to lawmakers in the coming days.
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Tillis and Alsobrooks did not back down, with the pair saying the deal was locked and pointedly telling the banks that they “respectfully agree to disagree.”
Coinbase Chief Legal Officer Paul Grewal, who attended earlier White House meetings on this exact dispute back in February, was characteristically dry on X:
“I must say I feel obligated to offer my congratulations to the banking trades,” he wrote. “They’ve managed to do the impossible in our country these days: bring sensible Rs and Ds together.”
Circle Stock Rebounds
Markets responded almost immediately to the news, with Circle shares closing May 4 at around $120, up from roughly $100 the previous session. They then climbed further in after-hours trading to about $126.
That marks a sharp reversal from late March, when the stock dropped about 20% in a single day after earlier drafts of the legislation raised concerns about a blanket ban on stablecoin yield.
This time, the reaction has been different. The latest compromise still restricts interest-like payments but leaves room for other forms of rewards, which analysts have previously said match Circle’s existing model. The company already keeps the yield generated from reserves backing its USDC stablecoin rather than passing it on to users.
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