Why US community banks say the GENIUS Act has a stablecoin loophole

U.S. community banks are raising concerns regarding the GENIUS Act, stating that stablecoin rewards offered through exchanges exploit a loophole in the legislation, blurring the lines between payment tokens and savings accounts. This raises new challenges at the intersection of traditional banking and crypto. Recent developments in the legislation could affect the role of stablecoins in the financial system. While stablecoins contribute to liquidity in the crypto economy, there is also a need for their regulatory framework to be strengthened. This issue is tied to the intensifying competition faced by community banks, which find stablecoin reward programs attractive for customer retention but are concerned about the lack of legal transparency. As the stablecoin market continues to grow, calls for enhanced regulation are becoming more prominent.