TD Cowen Sees Only 10% Chance for Stablecoin Yield Ban in US Congress

stablecoin yield ban — Analysts at TD Cowen estimate just a 10% probability that the US Congress will pass a ban on stablecoin yield payments over the next two years, despite renewed lobbying efforts from the banking industry.

In a policy note, TD Cowen’s Washington analyst Jaret Seiberg outlined the political landscape following the Democratic midterm election victories. While banks are expected to push for a ban on exchanges offering yield for holding stablecoins, Seiberg views the path to legislation as narrow. He argues it may be procedurally easier to find Senate consensus on this single issue than on a comprehensive crypto market structure bill, which failed a key vote in September.

The analyst notes that key committee leadership changes, including Senator Elizabeth Warren‘s likely ascension to chair the Banking Committee, could create an opening for such a ban. However, he cites significant hurdles, including a lack of Democratic unity on the issue and the political optics of preventing retail investors from earning returns on digital dollar holdings.

The debate stems from a perceived loophole in the GENIUS Act of 2025, which banned stablecoin issuers from paying yield but did not explicitly cover rewards offered by third-party platforms like exchanges. Banking associations argue these platform rewards effectively constitute interest, pulling deposits away from community banks.