Multicoin CEO: GENIUS Act will end bank fraud and increase competition with stablecoins

Key points:

• Multicoin Capital co-founder Tushar Jain said the GENIUS Act will end banks’ low deposit rates.
• The new law will increase competition between banks and technology companies.
• The US Treasury expects an outflow of up to $6,6 trillion in deposits from banks to digital assets.

Multicoin Capital co-founder and managing partner Tushar Jain said that the GENIUS Act, passed in July to regulate the stablecoin market, will be a turning point for the US banking system. In his opinion, the document will cause a massive outflow of deposits from banks and increase competition from digital currency issuers.

“The Genius Bill is the beginning of the end for banks' ability to rip off their retail depositors with minimal interest,” Jain wrote on x

Source x.com

He noted that now large technology companies — Meta, Google, and Apple — will be able to compete with banks by offering users stablecoins with more attractive returns, instant transfers, and round-the-clock payments.

Banks are losing their advantage

According to Jain, banking lobbies have attempted to limit the influence of stablecoins by seeking to ban interest payments to token holders. However, the GENIUS Act prohibits only issuers from accruing income, without extending the ban to affiliated companies and crypto exchanges.

This, Jain believes, creates an opportunity to circumvent restrictions and pay income to users through partners — as Coinbase does.

“Banks are going to have to pay more interest to depositors and their earnings will significantly suffer as a result,” Jain added.

Potential outflow of $6,6 trillion from banks

According to the US Treasury Department, the widespread adoption of stablecoins could lead to an outflow of up to $6,6 trillion in deposits from the banking system. The agency warns that this could weaken the credit market and increase the cost of borrowing for businesses and households.

Nevertheless, supporters of the law are confident that the emergence of stablecoins with returns will create a more equitable and competitive financial system.

What the GENIUS Act will change

The GENIUS Act is the first federal document to establish the legal status of stablecoins in the US. It establishes requirements for reserves, reporting, and transparency for issuers, and regulates the procedure for interacting with users.

Experts believe that the law will redistribute influence in the US financial system, making the market more transparent and competitive, and stablecoins a new tool for retail customers.