Stablecoins are not credit cards: Paradigm executive reveals regulatory misalignment in the legislation of the GENIUS Act

OnChainDetective · 2026-01-08T02:20:12+00:00

Paradigm Vice President criticizes some banking lobbying groups' proposal to restrict stablecoin applications, allowing only "merchant transactions," emphasizing that stablecoins should encourage holding rather than profit solely through spending, and warns that this move will weaken the international competitiveness of the US stablecoin ecosystem.

OnChainDetective

2026-01-08 02:20:12

Abstract generation in progress

【Crypto World】Paradigm’s Vice President of Government Affairs recently published an article criticizing a discordant voice — some banking lobbying groups are pushing to amend legislation on the structure of the crypto market, attempting to restrict stablecoin reward mechanisms from their original broad application scenarios to a framework of “only merchant transactions.”

Does this sound off? Indeed it does. The executive bluntly pointed out that comparing stablecoins to credit cards is fundamentally a mismatch in regulatory thinking.

Why? Because their natures are completely different. Stablecoins are essentially “quasi-debit” tools. Their true revenue doesn’t come from transaction fees — but from the continuous income generated by reserve assets (like U.S. Treasuries) during the period you hold the coins. This money is proportional to the amount of coins held and has nothing to do with how many transactions you make.

If regulators truly only allow rewards to be distributed in consumption scenarios, what would be the result? It’s like secretly imposing a “holding tax” on all stablecoin holders — the earnings that should flow to the holders are diverted by intermediaries.

This is not only unfair to individual users and businesses but also poses a greater risk. The U.S. stablecoin ecosystem could lose its international competitiveness, with large amounts of capital and business flowing to overseas competitors.

The core point is simple: the design logic of stablecoins must revolve around the characteristic that “holding itself can generate value.” Otherwise, it’s self-sabotage and runs counter to the original intention of the GENIUS Act to stimulate innovation.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

10 Likes

Reward
10
9
Repost
Share

Comment

0/400

MemeTokenGenius

· 01-10 12:06

The bank lobbying group is really impressive, insisting on fitting stablecoins into the credit card framework, what a mindset... --- Laughing to death, they clearly don't understand what stablecoins are, but still want to use credit card analogy --- Wait, if such restrictions are imposed, stablecoins won't be able to generate yields? What a joke --- Paradigm's point this time is spot on; banks just want to block the crypto path --- Government bond yields vs. transaction fees, such a obvious difference and they still get confused. Regulators really need to catch up --- Here comes another monopoly play under the guise of "protecting consumers," old tricks --- Holding coin size = yield, this logic probably goes over the heads of traditional banks, after all, they rely on transaction fees --- So ultimately, is traditional finance targeting innovative models? Think it through

View OriginalReply0

GateUser-1a2ed0b9

· 01-10 07:15

Banks really want to monopolize everything... They insist on linking stablecoins and credit cards, the logic is utterly ridiculous. --- Here we go again, regulators always understand technology last and rush to change the rules. --- USDC and the like are a different matter altogether; forcing them into the credit card framework is just laughable. --- Are the holdings yields being cut? Then what am I holding? If these rules pass, it will be outrageous. --- Paradigm is right this time; the banking lobbying group just wants to stifle stablecoin growth. --- This move is just traditional finance not wanting to be disrupted, so they mess around with regulations. --- The yield on reserve assets and transaction fees are concepts from completely different worlds. Who came up with this logic? --- Even US Treasury yields are being restricted? Then what advantages do stablecoins have... This is just too much.

View OriginalReply0

NftRegretMachine

· 01-08 02:49

The bank's tricks are really top-notch, insisting on forcing stablecoins into credit card usage, probably just afraid we'll earn that little interest money. --- Again with this? Regulators simply don't understand the difference between holding rewards and transaction fees... --- Paradigm is right, restricting consumption scenarios and rewards is equivalent to destroying the core advantage of stablecoins. This logic is really absurd. --- The bank lobbying groups are getting anxious haha, serves them right for being torn apart by Paradigm. --- This is hilarious—treating stablecoins like credit cards, next step, are they going to compare BTC to Alipay? --- That's why we need good policy advocates; otherwise, a one-size-fits-all regulation will ruin us all. --- Holding rewards and transaction fees are two different things. If you can't see that, I really can't argue with you. --- So basically, banks are afraid stablecoins will take their business, otherwise why are they so focused on restricting clauses?

View OriginalReply0

MetaMisery

· 01-08 02:44

The banking lobbying groups are really playing tricks, trying to force stablecoins into the same category as credit cards. Isn't that ridiculous? --- Here we go again, regulators still haven't understood the logic behind stablecoins. Truly frustrating. --- Huh? Limiting to merchant transactions? What about holding rewards? What about the promised US Treasury yields? --- These people are just afraid that stablecoins will steal bank business, and now they're starting to come up with reasons. --- Well said. Stablecoins and credit cards are not the same at all. Why do some people always conflate them? --- Misaligned regulatory thinking—this phrase is spot on. The banking lobbying groups are just causing trouble. --- Wait, so the scale of holdings determines the yield? I need to see how this mechanism works. --- They're about to cut features again. Can't go on like this. --- Paradigm hit back this time and it felt good. Someone needed to expose this chaotic logic.

View OriginalReply0

MechanicalMartel

· 01-08 02:32

The bank lobbying group is really outrageous, forcing stablecoins to be regulated like credit cards— isn't that absurd? Where do stablecoins get their money from? It's from government bond yields, not transaction fees. They are two completely different things. Only allowing merchants to trade to earn rewards? Isn't that just trying to lock in the advantages of stablecoins? Paradigm's point this time is spot on; the regulatory logic is indeed reversed. Using government bond yields to incentivize holding coins and earning based on transaction volume—how can you not see the difference? They really treat stablecoins like credit cards—laughable.

View OriginalReply0

WalletWhisperer

· 01-08 02:28

ngl the whole "stablecoins are credit cards" angle is just regulatory theater... banks are literally terrified of the yield mechanics, watch the wallet clustering patterns around reserve assets and you'll see the real story nobody's discussing. this isn't about consumer protection, it's about who captures that treasury yield. paradigm's right on the pattern here.

Reply0

MoonlightGamer

· 01-08 02:25

What are banks doing... turning stablecoins into credit cards? Does this logic even make sense? --- It's the old trick of banks trying to kill crypto again, I'm really speechless. --- Honestly, stablecoins are just debit tools. Forcing them into a credit card framework is just asking for trouble. --- Paradigm's point this time is spot on; regulators are really going the wrong way. --- I just want to ask, if holding coins doesn't earn interest, what are stablecoins even good for? --- Bank lobbying groups are still messing with these things, enough already. --- If the earnings from holding coins are cut? Then what's the point of using stablecoins?

View OriginalReply0

JustHodlIt

· 01-08 02:25

Bank lobbying groups are really outrageous, insisting on forcing stablecoins into the credit card framework... Isn't this logic toxic? --- Paradigm is right, the profit model of stablecoins is completely different, yet they insist on forcing them into consumer scenarios. --- Wait, only allowing merchants to distribute rewards for transactions? Isn't this a de facto suppression of the normal operation of stablecoins? --- The yield of reserve assets has nothing to do with transaction frequency; regulators are still in a daze. --- Here they come again... Banks are scheming, afraid that stablecoins will steal their business. --- Holding coins to earn interest vs. using a credit card to have money... How do these two compare? Where is the regulator's brain? --- Paradigm deserves praise this time, clearly exposing the logical loopholes in regulation. --- Not allowing ordinary people to benefit from holding stablecoins is a clear suppression of innovation. --- Bank lobbying groups are causing trouble again, really annoying. --- Regulators misunderstood and still insist on pushing... The GENIUS Act legislation has issues.

View OriginalReply0