A quiet but high-stakes war is unfolding in Washington, one that could determine whether your digital dollars are allowed to work for you or if they must remain a passive product of the banking system. At the center of the fight is a staggering $360 billion annual revenue machine that American banks are desperate to protect.
While public debate focuses on consumer safety, new data suggests the banking industry’s intense lobbying against stablecoin rewards is driven by a need to defend two massive, low-risk income streams: interest paid by the Federal Reserve and the swipe fees merchants pay on every credit card transaction.
The $360 Billion ‘Toll Booth’
Coinbase Chief Policy Officer Faryar Shirzad recently pulled back the curtain on why banks are so terrified of stablecoins. In a thread posted on Jan. 8, Shirzad highlighted numbers that banking lobbyists would prefer to keep out of the headlines.
U.S. banks currently earn approximately $176 billion annually simply by parking their cash reserves at the Federal Reserve. This is essentially risk-free income paid for by the government. On top of that, the banking sector collects another $187 billion a year in “swipe fees” (interchange fees) from merchants every time you use a credit or debit card.
Together, these two streams amount to over $360 billion in revenue—effectively a hidden tax of nearly $1,400 on every U.S. household.
Due to their access to higher rates through U.S. Treasury Securities and ability to remove expensive transaction costs associated with credit card networks (e.g. Visa, MasterCard), Stablecoins represent a competitive threat to banking institutions by providing consumers with an economical and efficient option for making payments without banks acting as intermediaries between consumers and merchants.
The GENIUS Act Battleground
The conflict over the GENIUS Act has escalated after the legislation was enacted into law in July 2025 to create a stablecoin regulation. Under this law, it explicitly sets forth that no stablecoin issuer shall pay interest directly to users, which was necessary to appease banks that were opposed to having an interest-bearing stablecoin because it closely resembled a bank account that operated outside of regulation.
In retaliation, the crypto sector created a means of working around this legislation. For example, large exchanges and platforms began offering “rewards” to those that utilized their service via a third-party affiliate program. The monetization of the transaction would not be communicated as an interest payment, but as a loyalty incentive.
On Jan. 6, 2026, the American Bankers Association (ABA), joined by 52 state banking associations, sent a blistering letter to Congress urging lawmakers to close this “loophole.” They argue that any entity—whether an issuer or a third-party exchange—should be banned from offering yield to customers. Their argument is framed as a concern for financial stability, warning that deposit flight could impair their ability to lend to local communities.
The China Card
While U.S. banks try to regulate stablecoins into submission, global competitors are moving in the opposite direction. In January 2026, China has announced that it will now allow commercial banks that participate in the digital yuan (e-CNY) platform access to pay interest to their customers for using e-CNY wallets. The discussion has reached such a level that it is now being framed as a national security concern. Proponents of cryptocurrency such as Shirzad believe that if the U.S. prohibits rewarding customers with interest on stablecoins that are pegged to the U.S. dollar, and China continues to provide the capability for customers to earn interest on their digital currency, it will be necessary for users throughout the globe to flock to the more lucrative digital currency options. This could weaken the U.S. dollar’s dominance in the digital economy just as it is being challenged by rivals.
Disrupting the Duopoly
The threat to the credit card industry is just as potent. In 2024, American merchants paid close to $187 billion in fees to process a card payment. The card-processing industry is controlled by a small group of major card issuers that account for greater than 90% of all card transaction volume.
Stablecoins bypass this expensive infrastructure entirely. On-chain payments cost a fraction of a penny, regardless of the transaction size. If stablecoins were to capture just 5% of the U.S. card purchase volume, it would save merchants over $9 billion annually—money that currently goes straight to bank bottom lines.
With stablecoin transaction values reportedly hitting $33 trillion in 2025, the technology has proven it can scale. For the banking lobby, the goal is now to ensure that this efficiency doesn’t come at the cost of their most reliable revenue streams.
The question Congress must now answer is whether to protect the incumbents’ $360 billion toll booth or allow a new technology to compete, potentially returning billions in value to American consumers and merchants.
