GENIUS Act Expected to Shift Trillions from US Banks to Tech-Backed Stablecoins

The GENIUS Act, recently enacted to regulate stablecoins, is poised to disrupt traditional retail banking by enabling tech giants such as Meta, Google, and Apple to offer stablecoin products with significantly higher yields and better digital payment features. Multicoin Capital's Tushar Jain predicts this will end banks' practice of paying minimal interest to depositors, thus forcing banks to raise their rates or face substantial deposit outflows. Despite the Act banning direct interest payments from stablecoin issuers, loopholes may allow affiliate programs to provide competitive yields, intensifying pressure on banks. The US Treasury estimates that stablecoin adoption could trigger $6.6 trillion in deposit withdrawals from traditional banks, raising concerns among banking groups about financial stability. Currently, stablecoins like Tether and USD Coin offer yields around 4%, compared to average US savings account rates of 0.40%, highlighting the competitive advantage stablecoins hold. This shift signals a major change in the financial ecosystem, with technology companies leveraging their vast platforms to challenge banks' dominance in the retail deposit market.