Stablecoin Loopholes Put Louisiana Businesses at Risk of Higher Costs and Unfair Competition

Staff @ LT&C
Aug 19
1 min read

The GENIUS Act was intended to bring order to the fast-growing stablecoin industry. Lawmakers prohibited issuers from paying interest to stablecoin holders, seeking to prevent these products from masquerading as bank accounts without bank-level regulation. But already, large corporations are finding ways around the rules — and Louisiana businesses could pay the price.

Coinbase, for example, no longer issues the popular USDC stablecoin but still offers users a 4.1% “reward” on deposits. PayPal’s stablecoin, PYUSD, is technically issued by a third-party company, allowing PayPal to provide yields of nearly 4% to Venmo and PayPal customers. These workarounds may not violate the letter of the law, but they certainly violate its spirit.

Why does this matter for Louisiana commerce? Because money flowing into these reward programs often comes out of traditional banks. Community and regional banks provide credit lines to small manufacturers in Shreveport, restaurants in Baton Rouge, and offshore service companies in Houma. If deposits leave the banking system, the cost of capital for these businesses rises — while Silicon Valley platforms benefit from lighter oversight.

Louisiana businesses already face global competition. They shouldn’t also have to compete on an uneven financial playing field where the rules favor tech giants at the expense of local lenders and job creators. Closing the loopholes in the GENIUS Act must be a top priority before Louisiana’s economy suffers the consequences.

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