Paradigm Vice President of Government Affairs: Restricting Stablecoin Rewards to Transaction Trigger Mechanism is Economically Unsound

In a recent post, Paradigm's Vice President of Government Affairs, Alexander Grieve, pointed out that some banking lobbying groups are pushing to tighten the existing arrangements of the "GENIUS Act" regarding stablecoin reward mechanisms in crypto market structure legislation, attempting to limit stablecoin rewards to "merchant-facing transaction behavior," which is not economically viable.

Grieve stated that likening stablecoins to credit card products is a regulatory misalignment. Stablecoins are fundamentally "quasi-debit" tools, with their core revenue source not being transaction fees, but the continuous income generated by reserve assets (such as US Treasury bonds) held during the period, value related to asset size, not transaction frequency. Allowing rewards to be distributed to users only in consumption scenarios is akin to imposing an "implicit holding tax" on stablecoin holders, allowing intermediaries to retain profits.

He pointed out that this move is not only detrimental to individual and corporate users, but may also weaken the international competitiveness of the US stablecoin ecosystem, leading to funds and business flowing overseas. Grieve emphasized that the economic mechanism of stablecoins should be designed around the characteristic of "value generation through holding," otherwise it will weaken the original legislative intent of the "GENIUS Act" to promote innovation.

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