#United States #Arlington #IntraFi #Stablecoins #GENIUS Act

Concerns Over the Effectiveness of the GENIUS Act

In a recent survey conducted by IntraFi, bank executives have expressed significant apprehension regarding the newly enacted GENIUS Act, which aims to regulate stablecoins in the United States. Specifically, they fear that major corporations such as Amazon and Walmart may find ways to circumvent the Act's prohibitions against offering interest on stablecoins, thereby enhancing their competitive edge in the financial market.

What Is the GENIUS Act?

The Guiding and Establishing National Innovation for U.S. Stablecoins Act, known as the GENIUS Act, was signed into law on July 18, 2025. This legislation sets forth regulatory standards for stablecoins, primarily focused on ensuring they do not pay interest or provide other financial incentives to users. This measure aims to maintain a level playing field for banks and prevent large corporations from creating financial products that could draw customers away from traditional banking services.

Despite the intentions behind the GENIUS Act, the survey revealed that a staggering 96% of bank executives doubt its efficacy. Mark Jacobsen, co-founder and CEO of IntraFi, remarked on the prevalent skepticism within the banking community: “Bankers recognize the intent behind the GENIUS Act, but there's skepticism about its effectiveness.” He highlighted concerns that tech companies and retailers might exploit loopholes to offer yield-bearing stablecoins, which could lead to intensified competition for deposits held by traditional banks.

Survey Findings and Insights

Additionally, the survey highlighted a notable divide in the banking sector regarding stablecoin implementation. While large banks such as J.P. Morgan Chase and Goldman Sachs are exploring stablecoin technologies, over half of the surveyed executives (52%) indicated that their institutions have no immediate plans to launch similar products. This lack of initiative underscores a cautious approach among banks, reflecting uncertainty regarding the future landscape of digital currencies.

The survey also shed light on the growing concerns regarding fraud, particularly in relation to check processing. A striking 82% of bank executives noted that delays or a lack of cooperation from the originating bank present substantial obstacles in managing fraud disputes. Furthermore, 68% voiced difficulties in obtaining reimbursements from the bank of first deposit, while 60% acknowledged that their institutions frequently reimburse customers even when there’s no legal obligation to do so.

Call for Regulatory Clarity

There is a clear demand for more explicit regulations surrounding fraud liability in banking systems. A robust 82% of respondents supported the development of regulations that outline banks' responsibilities to their customers when it comes to reimbursements due to fraud. Additionally, over 70% of the executives advocated for improved cooperation and information sharing between banks to better address issues of fraud.

Future Outlook

Looking ahead, the survey provided insights into the overall sentiment within the banking industry:

• - Loan Demand: 45% of bankers anticipate increased loan demand over the next year, a rise from 39% in the previous quarter.
• - Funding Costs: 62% of respondents expect decreases in funding costs soon, although timing remains uncertain regarding potential cuts in Federal Reserve interest rates.
• - Deposit Competition: 93% predict that competition for deposits will either remain stable or increase, marking the highest expectations since the third quarter of 2023.
• - Access to Capital: 73% foresee stable access to capital, continuing a longstanding trend within the industry.
• - Economic Outlook: Only 29% believe that economic conditions will improve over the next year, indicating cautious optimism among financial executives.

The findings from IntraFi's Q2 2025 Bank Executive Business Outlook Survey reflect the complex interplay between regulatory changes, competitive pressures, and evolving market dynamics. As banks navigate this landscape, the implications of the GENIUS Act and its enforcement will be closely monitored by industry stakeholders.

About IntraFi

IntraFi has established itself as a trusted partner for over 3,000 financial institutions in the United States. For more than two decades, it has helped banks build stronger connections with customers, manage liquidity needs, and generate fee income through its extensive network. By providing access to substantial funding opportunities, IntraFi empowers institutions to stay competitive in an evolving financial environment.