Trump advisor speaks out: Stablecoins may attract global capital flows into the U.S. banking system, and the impact of the "GENIUS Act" should not be underestimated

March 12 News: U.S. President Trump’s digital asset advisory team recently issued their latest views on stablecoin regulation. Patrick Witt, Executive Director of the President’s Digital Asset Advisory Committee, stated that amid current debates over stablecoin yields, the market may be overlooking a larger macro trend — stablecoins compliant with the GENIUS Act regulatory framework could bring new capital into the U.S. banking system rather than weaken the deposit base.

Witt said on social platform X that global demand for dollar assets remains strong. If stablecoin issuance aligns with U.S. regulatory standards, overseas investors might enter the market by purchasing dollar stablecoins. This means foreign funds will first exchange into stablecoins issued by domestic institutions, which ultimately could translate into new capital flowing into U.S. banks.

However, traditional U.S. banks remain cautious about this model. Some banking organizations believe that if stablecoin issuers offer interest or rewards to holders, it could attract funds away from bank deposits into digital asset wallets, weakening banking system liquidity. Rob Nichols, head of the American Bankers Association, previously stated that the banking industry does not oppose financial innovation, but regulators should avoid “regulatory arbitrage,” where crypto firms offer bank-like yield products under lighter regulation.

Supporters of the crypto industry have a different view. They point out that the GENIUS Act imposes strict requirements on stablecoin issuers, such as full backing by cash or cash equivalents and restrictions on re-hypothecation or lending of reserve assets. Witt also emphasized that regulation should focus on how funds are used, rather than whether holders receive yields.

Currently, disputes over stablecoin reward mechanisms remain a key point of disagreement in U.S. digital asset legislation. Although the GENIUS Act has established a federal regulatory framework for payment stablecoins, consensus on the regulation of yield-bearing stablecoins is still incomplete, affecting broader legislative efforts like the Clarity Act.

Former President Trump previously stated on Truth Social that the GENIUS Act is an important step toward making the U.S. a global crypto hub, and advancing the Clarity Act would further improve digital asset regulation. Sources reveal that the White House recently convened high-level banking and crypto industry executives in a closed-door meeting to seek new policy consensus on stablecoin regulation.