A new crypto crime-fighting network has enlisted a mix of digital asset and payment processing partners, even as the intersection of blockchain and banking is jammed with road rage.
On August 19, the Blockchain Association (BA) and the Crypto Council for Innovation (CCI) sent a joint letter to the U.S. Senate’s finance-focused leadership. The letter expresses the organization’s opposition to efforts by traditional bankers to close alleged loopholes in the stablecoin-focused GENIUS Act, which President Trump signed into law last month.
The BA/CCI letter pushes back against claims made in two letters sent to the Senate Banking Committee earlier this month by the American Bankers Association (ABA) and the Bank Policy Institute (BPI). Those banking letters asked the Senate to craft regulations that, among other things, prohibit crypto operators from offering users ‘rewards’ on stablecoins held on their platforms.
The bankers claim these ‘reward’ offers violate GENIUS’s prohibition of stablecoin issuers offering ‘yield’ to token holders. Some estimates have the all-time total value of stablecoin ‘yield’ paid out as high as $800 million.
The BA/CCI express their “strong opposition” to the claims in the ABA/BPI letters, claiming the bankers are trying to “relitigate issues firmly resolved” in GENIUS. The bankers are accused of seeking to “create an uncompetitive payment stablecoin environment, protecting banks at the expense of broader industry growth, competition, and consumer choice.”
The BA/CCI note that stablecoins “are not bank deposits, or money market funds [MMF], or investment products, and thus, they are not regulated in the same way.” Unlike deposits, payment stablecoins aren’t used to fund loans. Unlike MMFs, stablecoins aren’t securities whose value depends on investment returns. The BA/CCI claim these distinctions played a role in how Congress drafted GENIUS, and thus the bankers missed their shot.
The banking sector’s claim that lucrative stablecoin yield/rewards will lead to trillions in bank deposit outflows “does not hold up to scrutiny.” [Emphasis in the original.] The BA/CCI cite a 2025 Charles Rivers Associates report that claims the projected impact on community banks would be “modest,” ranging from below 1% of deposits withdrawn to a high of 6.8% in “an extreme stablecoin adoption scenario.”
However, it bears noting that this report was commissioned by the Coinbase (NASDAQ: COIN) digital asset exchange, which has a history of commissioning surveys that support its preferred viewpoints and which often differ greatly from other, more independent data sets. Coinbase also leans heavily on revenue generated from the USDC stablecoin issued by Circle (NASDAQ: CRCL).
As for exchanges like Coinbase offering ‘rewards’ to stablecoin holders, the BA/CCI claim “a level playing field demands that banks and crypto firms alike be permitted, and incentivized, to develop an intermediated and competitive market.” Crypto operators can’t help it if banks “routinely fail to deliver competitive returns and deprive consumers of meaningful choice.”
The ABA’s letter to Congress also sought the repeal of GENIUS’s section 16(d), which would allow out-of-state chartered institutions to provide services across state lines without the approval of the local state authority. The ABA argued that states had a constitutional authority and a practical responsibility to supervise financial conduct that impacts their residents.
The BA/CCI says section 16(d) allows stablecoin issuers to redeem stablecoins for fiat on behalf of a holder in another state without having to seek a license in that state. If section 16(d) were repealed, “states could effectively veto the stablecoin redemption rights of out-of-state holders.”
As for GENIUS permitting non-financial companies to issue their own corporate stablecoins, the BA/CCI says banning this activity would be “an extreme, anti-competitive overreach” that would serve only to “shield incumbents from legitimate competition.”
The BA/CCI conclude their letter with some overt flattery of the “shrewd and thoughtful bipartisan coalition of legislators” who helped craft GENIUS’s terms. After such masterful legislation, altering GENIUS’s provisions “would be unwise and would fundamentally weaken” its framework.
Standing athwart history yelling ‘pause’
While they may be fighting stateside, other jurisdictions see the blockchain sector and banks team up to jointly protest rules they believe will negatively impact both sectors.
On August 19, the BPI, the Global Blockchain Business Council (GBBC), and a host of other financial sector bodies issued a joint letter to the Basel Committee on Banking Supervision (BCBS), asking it to delay implementation of its new rules governing how banks manage and disclose risks regarding their use of digital assets.
The BCBS, an offshoot of the Bank for International Settlements (BIS), announced new ‘cryptoasset standards’ in 2022 that are set to take effect in January 2026. While these standards have received minor tweaks since then, the banking groups insist that the crypto sector has since undergone major changes (for the better), and thus, a major rethink is required if the rules are to realize their intended results.
The bankers seek to “temporarily pause” implementation of the Cryptoasset Exposures chapter (SCO60) of the standards so that updates can be made regarding blockchain use cases, including tokenization. The bankers helpfully supplied a report on “the Impact of Distributed Ledger Technology in Capital Markets” that they believe warrants further discussion of “any appropriate redesign and recalibration of the Cryptoasset Standard.”
The letter claims that, as is, the “restrictive qualification standards, combined with otherwise punitive market and credit risk capital treatments, effectively make it uneconomical for banks to meaningfully participate in the cryptoasset market.” This is a bad idea, since directly involving banks with native crypto operators “promotes safety and soundness, client protections, and financial stability by allowing activity inside the banking sector.”
The letter offers several proposed revisions, including eliminating the distinction between permissioned and permissionless ledgers; creating a distinction between “regulated and unregulated” stablecoins; recognizing certain tokens as “eligible collateral;” and foregoing the embrace of “prescriptive ledger rules” in favor of evaluating tokens on their “compliance with the principles of legal enforceability and settlement finality.”
The letter warns that countries like the U.S. “have not yet proposed to implement the Cryptoasset Standard or indicated any timeline for implementation.” Proceeding as if this weren’t the case threatens to undermine the goal of “establishing a minimum standard that enables a level playing field, mitigates cross-border risk spillovers and prevents market fragmentation.”
Some in the crypto community are already referring to the BCBS standards as a ‘chokepoint’ for digital asset firms, in that banks subject to these requirements will reject crypto customers to minimize their exposure to the sector.
The above is a reference to Operation ChokePoint 2.0, the conspiracy theory that U.S. banks colluded with the government to make it impossible for crypto operators to gain banking access. (We’ve since moved on to the 3.0 version of this theory, and perhaps to 4.0 by the time this is published.)
Beacon Network sounds the alarm on crypto crime
Whether you’re a bank or a ‘be your own bank’ type, everyone’s got a role to play in ensuring bad actors can’t convert the proceeds of crypto crime into fiat cash.
Enter the Beacon Network, a new “real-time intelligence-sharing system that helps law enforcement, crypto exchanges, DeFi [decentralized finance] services, and stablecoin issuers stop illicit funds before they are withdrawn.”
It works like this: “verified” investigators flag digital wallets associated with “financial crime,” and Beacon “automatically propagates those labels across related wallets.” Should flagged tokens reach a Beacon partner exchange or other financial platform, Beacon issues an “instant alert.” Token issuers and exchanges can then “proactively review and hold flagged deposits before withdrawal.”
Beacon is the product of blockchain intelligence firm TRM Labs, which says “leading federal law enforcement agencies globally are actively contributing” to Beacon by “flagging addresses linked to critical threats and triggering alerts.” Affiliate membership in Beacon is free for verified exchanges and law enforcement agencies.
TRM is a founding member of the T3 Financial Crime Unit (T3 FCU), a crime-fighting/token-freezing initiative involving TRM, USDT stablecoin issuer Tether, and the Tron blockchain that launched a year ago. Last week, T3 FCU branched out into T3+ by welcoming its first exchange partner (Binance) and freezing nearly $6 million in tokens related to a ‘pig butchering’ operation.
Binance is also a Beacon founding member, along with (deep breath) Coinbase, PayPal (NASDAQ: PYPL), Robinhood (NASDAQ: HOOD), Stripe, Kraken, Ripple, Crypto.com, Zodia Custody, Blockchain.com, Anchorage Digital, Bitfinex, HTX, Poloniex, OKX, LFJ, 1inch, Rhino.fi, Coinspot, ChangeNow, and more.
Beacon also benefits from continuous monitoring by security researchers like ZachXBT, Security Alliance (SEAL), zeroShadow, Hypernative, Operation Shamrock, and CryptoForensics Investigators.
TRM CEO/co-founder Esteban Castaño said Beacon wasn’t just about “adding another layer of compliance.” Beacon’s real-time transparency, automated detection, and rapid response have the potential to make crypto “the most secure financial system in the world.”
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