XRP supporters are pushing back hard as major banks attempt to rewrite landmark U.S. stablecoin regulations. The focus of this growing dispute is the GENIUS Act, a recently enacted law designed to support innovation in stablecoin frameworks, which Ripple and related blockchain groups argue should remain intact.

Pushback Against Proposed Stablecoin Amendments

On August 19, leading crypto advocacy groups—the Crypto Council for Innovation and the Blockchain Association—sent a letter to the Senate Banking Committee addressing concerns over lobbying efforts by Wall Street banks. The letter urges lawmakers to ignore requests from the American Bankers Association and other banking alliances to eliminate Section 16(d) from the GENIUS Act and to prohibit yield-earning programs linked to stablecoin issuers.

Section 16(d) permits subsidiaries of state-chartered financial institutions to facilitate cross-border money transmission for stablecoin operations without requiring separate licenses in each state. This provision ensures that holders can redeem stablecoins across all states seamlessly.

Bank Concerns Over Loopholes and Deposit Drain

Opponents of the current law, largely from the banking sector, argue that this state-chartered path introduces a regulatory backdoor. Their concerns extend to the apparent loophole that bans interest offerings directly by issuers but not by their affiliates. Banking groups fear this could lure consumers away from traditional banks, potentially shifting up to $6.6 trillion in deposits.

These concerns, however, have been called into question. The August 19 letter referred to a July 2025 report by Charles River Associates, which found no real evidence that stablecoin growth correlates with community bank deposit declines. Instead, most stablecoin reserves, including those behind XRP-centric projects, are held in commercial banking systems or U.S. Treasuries, thus maintaining their support for the broader economy.

Stablecoin Features Offer Competitive Value

Crypto organizations argue that stablecoin-linked yield programs empower consumers, especially underserved and underbanked groups. Allowing affiliates to reward users creates healthy competition in a finance sector traditionally dominated by legacy players.

Chart shows how most stablecoin reserves, including those linked to XRP, remain within the traditional banking system.

For comparison, checking accounts at traditional banks currently earn an average annual percentage yield (APY) of just 0.07%, far below the inflation rate and the Federal Reserve’s benchmark rate of 4.25%–4.50%. Yield opportunities offered through stablecoins, especially XRP-pegged solutions, present a rare chance for financial inclusivity and upward mobility.

Ripple Effects on Upcoming Legislation

Although the GENIUS Act has been signed into law, additional legislation may further influence stablecoin governance. The Digital Asset Market Clarity Act, which passed the House and now awaits Senate review, could reshape the current provisions as regulators prepare to implement the rules. Banking firms continue to lobby for changes during this transition phase, while crypto-backed interests seek to protect the framework as passed.

According to Senate Banking Committee Chairman Tim Scott, the process could conclude by late September. He believes up to 18 Democrats may support the act but acknowledged hurdles from progressive voices such as Senator Elizabeth Warren, who may challenge provisions benefiting decentralized finance.

The final version of the bill must be reconciled with its House counterpart. That stage may still open the door for further attempts to modify stablecoin-related rules—an opportunity banking groups are actively eyeing.

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XRP advocates argue that maintaining the GENIUS Act’s current form is vital for leveling the playing field. Allowing innovation within the crypto ecosystem not only benefits economic competition but also enhances financial access for millions of Americans.