Bankers Worry New Stablecoin Law Won’t Prevent Big Retailers from Finding Loopholes

GENIUS Act Stablecoin Regulation is sparking major concern among U.S. bankers, according to a survey released by fintech IntraFi.

Signed into law on July 18, the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) sets regulatory standards for U.S. stablecoins, including preventing them from paying interest or offering financial incentives for adoption. Despite that measure, 96% of banking executives surveyed expressed concern that major retailers and tech companies will find loopholes to offer yield-bearing stablecoins, potentially increasing competition for bank deposits.

“Bankers recognize the intent behind the GENIUS Act, but there’s skepticism about its effectiveness,” said Mark Jacobsen, Cofounder and CEO of IntraFi. “Concerns are high that nonbank corporations will find a way to offer yield, creating potential competitive pressures for traditional banks.”

The survey also found that despite recent moves by major banks like J.P. Morgan Chase, Goldman Sachs, and BNY Mellon to pursue stablecoins and/or deposit tokens, more than half (52%) of bank executives said their institutions had no immediate plans to offer similar products.

The quarterly survey also explored increasing concerns around fraud, particularly challenges associated with fraudulent checks. Eighty-two percent of bank executives cited delays or lack of cooperation from the bank of first deposit as a significant hurdle in resolving fraud disputes. Additionally, 68% reported difficulty obtaining reimbursement from the bank of first deposit, while 60% indicated their banks often reimburse customers even when not legally required.

Bankers widely supported clearer regulatory guidance on fraud liability. Eighty-two percent favored new regulations explicitly outlining banks’ responsibilities for customer reimbursement, and over 70% supported enhanced collaboration and information sharing among banks to tackle fraud.

Other Highlights:

• Loan Demand: Forty-five percent of bankers anticipate stronger loan demand over the next 12 months, up from 39% last quarter.
• Funding Costs: Sixty-two percent of respondents expect funding costs to decrease in the coming year, though uncertainty remains regarding the timing of expected Federal Reserve interest rate cuts.
• Deposit Competition: Ninety-three percent expect competition for deposits to remain steady or increase, the highest level since Q3 2023.
• Access to Capital: Seventy-three percent predict stable access to capital, continuing a longstanding trend.
• Economic Outlook: Twenty-nine percent of respondents believe overall economic conditions will improve over the next year, reflecting cautious optimism.

As GENIUS Act Stablecoin Regulation takes effect, Banks are still concerned about how major corporations might contest its implementation, which makes regulatory clarity even more urgent. IntraFi’s Q2 2025 Bank Executive Business Outlook Survey garnered responses from CEOs, presidents, CFOs, and COOs at 455 unique banks nationwide. Download the full report.