$6.6 Trillion Bank Run Risk: Banking Group BPI Slams Coinbase, PayPal Stablecoin Rewards

• BPI warns stablecoin rewards could destabilize the financial system by shifting funds from banks. 
• The GENIUS Act only targets issuers, leaving platforms like Coinbase and PayPal in a legal gray area. 
• BPI urges Congress to close this loophole to prevent economic disruption.

The Bank Policy Institute (BPI), a major U.S. banking lobby group, is sounding the alarm over stablecoin reward programs from companies like Coinbase and PayPal, warning they could destabilize the financial system by exploiting a key gap in a recently passed law.

Loophole in the New GENIUS Act

These rewards, which resemble interest payments on stablecoin holdings, exploit gaps in the recently passed GENIUS Act. BPI warns that they could exacerbate deposit flight, where funds shift from traditional banks to stablecoins, leading to reduced credit creation and higher borrowing costs.

Notably, the GENIUS Act became law in July 2025. It prohibits stablecoin issuers from offering interest to stablecoin holders. This is to distinguish them from bank deposits, which are federally protected. 

Related: Ripple CEO Praises Trump as “Most Crypto-Forward” President After GENIUS Act Signing…

The post $6.6 Trillion Bank Run Risk: Banking Group BPI Slams Coinbase, PayPal Stablecoin Rewards appeared first on Coin Edition.