Treasury Warns Stablecoin Loophole Could Threaten $6.6 Trillion in Bank Deposits

Treasury Department analysts released a report warning that provisions in the GENIUS Act could allow stablecoin issuers to draw deposits away from federally insured banks, putting $6.6 trillion in bank deposits at systemic risk. The report identified a loophole where stablecoin reserve requirements permitted issuers to hold Treasury securities rather than FDIC-insured deposits, creating an unregulated shadow banking channel.