GENIUS Act and AML – will 6.6 trillion dollars leave the US banking system?

When Congress passed the GENIUS Act in early 2025, many people overlooked a key regulatory gap. It now turns out that the lack of proper guidelines regarding disclosure and compliance with AML (Anti-Money Laundering) regulations concerning stablecoins could pose a huge problem for the entire banking sector. The Bank Policy Institute (BPI), along with a coalition of influential financial institutions, sent a letter to Congress on January 6th, warning about the potential withdrawal of $6.6 trillion from the US banking system.

Regulatory Gap and the Shadow Stablecoin System

The main issue does not concern stablecoins themselves, but rather how they are used. Although the GENIUS Act prohibits stablecoin issuers from paying interest, cryptocurrency exchanges circumvent this regulation through affiliated companies, offering yields impossible to achieve on conventional savings accounts.

This represents a serious strategic loophole within AML and financial oversight. If stablecoins cease to serve as a payment tool and become high-yield investment products, there could be a massive migration of deposits from traditional banks. BPI emphasizes that such a change would be destructive not only to the balance sheets of lending institutions but also would reduce access to financing for the real economy—ranging from mortgage loans to corporate and agricultural financing.

The Stablecoin Market Grows Faster Than Regulatory Oversight

Market data reveal the scale of the problem. The total market capitalization of stablecoins reached $317.8 billion, with Tether (USDT) clearly dominating at around $187 billion. USDC from Circle showed aggressive growth of 73% over the past year, reaching a current capitalization of $75 billion.

Many wonder why stablecoins are growing so rapidly. The answer is simple—an interest rate gap. In a low-interest-rate environment in the traditional banking sector, stablecoins offering higher returns naturally attract capital. However, if Congress closes this gap through strict AML regulations and bans exchanges from offering interest, it could cause a drastic shift in the sector’s attractiveness.

Political Debate – Different Perspectives

Opposition to the GENIUS Act has emerged from several sides. Rep. Marjorie Taylor Greene publicly opposed the bill in July 2025, but for entirely different reasons—she feared the potential introduction of a central bank digital currency (CBDC). Greene emphasized: “I support crypto, but I will never support initiatives that allow the government to take full control over your money."

Meanwhile, Douglas Holtz-Eakin, president of the American Action Forum, pointed out a more technical issue: “The GENIUS Act focuses solely on stablecoins, neglecting the requirement for competition balance between them and other payment mechanisms." His proposal was to adopt a more holistic approach—Clarity Act—that would level the playing field for all traditional and digital payment forms.

Systemic Risks and the Future of $317 Billion

The current situation exposes a fundamental problem: AML frameworks and financial disclosure regulations were not built with crypto assets in mind. If Congress decides to close the interest rate gap, it could trigger a sudden outflow of capital from the stablecoin ecosystem.

An open question remains: if rewards and interest disappear, will the $317 billion stay in the system, or will it return to traditional banks? Or, in search of new alternatives, will this capital disperse across the entire DeFi network?

Long-Term Perspective

The current stablecoin loophole has evolved from a regulatory oversight into systemic risk that the traditional banking sector can no longer ignore. Implementing comprehensive AML frameworks, clear disclosure guidelines, and possible interest restrictions is no longer an option but a necessity.

Congress faces a real choice: quickly close the regulatory gap in the stablecoin system through strengthened AML regulations, or allow the growth of a parallel crypto-banking system. The answer to this question will have enormous implications for the $317 billion in capital and the future shape of the financial system.