The U.S. banking industry is accustomed to getting its way. That's evidenced by the fact that it continues to complain about one facet of the Genius Act, the giant stablecoin bill, which has already been signed by President Trump.

The big picture: The ongoing objections are over just how stablecoin issuers can use their profits to encourage people to use their tokens.

• Genius, which is not yet in effect, expressly forbids issuers from offering interest or yield simply for using or holding a stablecoin, á la banks with deposits. It's an issue the banking industry fought for and won.
• But banks are still complaining about what Genius does allow.

The latest: Crypto exchange giant Coinbase and the Blockchain Association trade group both began campaigns this week to keep Genius as is, permitting certain arrangements to benefit stablecoin users.

Between the lines: A new top lawyer for blockchain investor Variant Fund put out a great explainer on the Genius Act last week, with a very good section on how rewards offered to stablecoin users are meant to differ from yield.

• In short, they need to look more like discounts or perks.

The other side: The Bank Policy Institute, which represents major national and regional U.S. lenders, calls these rewards programs, permissible under Genius, an "interest loophole."

• And that's bad for everyone, it argues. In its newest post on the subject, it warns that a significant shift in money from bank deposits to stablecoins would cause fewer loans and higher rates on those that are made.
• From there, it argues stablecoins — with potentially tens of billions of dollars of reserves parked in banks as uninsured deposits — could even trigger a financial collapse.

My thought bubble: That part reminded me of how, in high school debate, we always liked to find a way to argue an affirmative team's homeless services or environmental foreign aid policy plan would inevitably lead to nuclear war.

• One time a former debater judging my round drew a mushroom cloud on my ballot and wrote "thanks for blowing up the world." That was fun. ☢️

Friction point: The crypto exchanges do seem to be pushing the boundaries a little bit into what most of us would think of as banking services.

• Coinbase offers competitive interest on staked USDC, and it also offers to loan out USDC against bitcoin collateral. Notably, while the Genius Act is passed, it won't be effective until the rules for it get promulgated.

What they're saying: "Big banks are dusting off a predictable playbook using the 'loophole' trope whenever there is competition," Summer Mersinger, CEO of the Blockchain Association, wrote in a letter to the chairs of Congress' two financial committees on Monday.

• Coinbase is pushing back with funny video dramatizations.
• The Bank Policy Institute tells Axios it is collaborating with the crypto industry productively on multiple fronts.

What we're watching: The Clarity Act hearings, when and if they ever happen, are the most likely venue to revisit these provisions.

Central banks may lose control over interest rates, while digital currency enables discreet capital flight, undermining exchange rate stability.

— Moody's Ratings in its "digital currency growth" report

Moody's Ratings put out a report last week that issues a warning not for normal banks, but foreign national banks, particularly those with weak regulatory regimes.

• "High penetration of USD-linked stablecoins in particular can weaken monetary transmission, especially where pricing and settlement increasingly occur outside the domestic currency," the report says.
• "This creates cryptoization pressures analogous to unofficial dollarization, but with greater opacity and less regulatory visibility," the report adds.
• But it also notes the upside potential for nations that are proactive.

Zoom out: Nic Carter, a longtime stablecoin advocate and crypto investor, has argued for years that cryptoization would be good for many places around the world, and that it's already underway.

SEC staff expressed their view last month that liquid staking doesn't constitute a security transaction.

Why it matters: Staking is the security model used by most new blockchains, providing investors with a way to earn yield on their coins.

• The SEC decision opens it to everyone.

Context: When users stake a crypto asset, they post it as insurance on a blockchain validator — the entities checking all the transactions.

• Validators earn more of the asset if they do their work well and they lose some of that insurance if they don't.

👆 The chart above helps to illuminate how staking has grown the wealth of investors in Ethereum's coin-of-the-realm, ether (ETH).

How it works: Ether is the coin used to pay for transactions and computations on the Ethereum blockchain.

• Staked ETH (STETH) is a liquid staking token. It's a token users receive when they post ether to the leading staking protocol, Lido. So if you hold STETH, your balance grows every day from staking revenue, which is nice but it's tricky for other smart contracts to work with.
• Wrapped Staked Ether is a derivative of staked ETH. And if a user buys one WSTETH they will always just have one WSTETH but it will be redeemable for more STETH every day.

Buying WSTETH is a simple way to participate in staking without jumping through any on-chain hoops.

• Plus, because WSTETH's balance is fixed, it works well with decentralized finance, opening up further yield strategies (for adventurous types).

By the numbers: What the chart shows is how a small annual yield denominated in an asset rising in value (ether), can show attractive compounding gains in dollar terms.

Case in point: One ETH turned into WSTETH back in 2021 when Lido created the asset would now be worth 21% more than if it had just sat in a wallet.

The bottom line: Not bad!

😮 Vanguard's ex-BlackRock CEO may end up offering crypto ETFs to the company's users. (Crypto in America)

🚪New York's financial services department chief, Adrienne Harris, who has shown up many times in this newsletter, is leaving next month. (Blockworks)

🤺 The CFTC and SEC chiefs said the turf war over crypto is over. (The Block)

🇫🇷 Telegram founder and CEO Pavel Durov said that the French government attempted to leverage his court case to get him to censor Telegram channels in Moldova. (@durov)

🥾 ICE raided a bitcoin mine in West Texas. (Blockspace Media)