American banks are urging Congress to strengthen the new stablecoin law, arguing it leaves loopholes that could destabilize financial systems. The American Bankers Association (ABA) and other trade groups warn that while the legislation restricts interest payments on stablecoin holding, it fails to address entities like exchanges or brokers offering similar incentives. This potential loophole could lead to deposits shifting away from traditional banks towards stablecoins seeking yield, shrinking the pool of capital available for loans. The bankers fear this unchecked growth could turn stablecoins into assets rivaling bank deposits, potentially impacting credit creation and market stability. They call for a broader ban on affiliated companies to stop the practice. Coinbase’s Chief Legal Officer Paul Grewal counters these concerns, stating that they represent an attempt to hinder competition rather than protect consumers and investors.