The Blockchain Association, a nonprofit cryptocurrency advocacy group, wrote a letter to the U.S. Senate Banking Committee, signed by more than 125 cryptocurrency groups and companies, opposing the ban on third-party service providers and platforms offering rewards to stablecoin holders.

Extending the ban on direct-to-consumer stablecoin issuers set out in the GENIUS stablecoin regulatory framework to third-party service providers stifles innovation and leads to “greater market concentration,” the letter says he said.

The letter compared rewards offered by crypto platforms to those offered by credit card issuers, banks and other classic payment service providers.

Banning cryptocurrency platforms from offering similar stablecoin rewards gives an unfair advantage to incumbent financial services providers, the Blockchain Association has said.

“The potential benefits of payment stablecoins will not be realized if these types of payments cannot compete on a level playing field with other payment mechanisms. Rewards and incentives are a standard feature of competitive markets.”

The Blockchain Association has released several statements and fiction pushing back against efforts to ban crypto platforms from sharing profit-making opportunities with customers, arguing that these rewards support consumers offset inflation.

Related: The Bank of Canada sets criteria for “well-priced” stablecoins.S

FDIC clears path for banks to issue stablecoins, industry group says stablecoins pose no threat

The Federal Deposit Insurance Corporation (FDIC), the US regulatory agency that supervises and insures the banking industry, published a report application on Tuesday, which would allow banks to issue stablecoins through subsidiaries.

Under the proposal, both the bank and its stablecoin subsidiary would be subject to FDIC rules and financial health assessments, including reserve requirements.

The Blockchain Association continues to refute claims that profitable stablecoins and customer reward sharing threaten the banking sector and banking stocks.

“Evidence does not support claims that stablecoin rewards threaten local banks or creditworthiness” – Blockchain Association he saidadding that it is arduous to demonstrate that bank lending is actually confined by customer deposits.

Still, the banking industry has lobbied against profitable stablecoins and crypto platforms that share profits with customers, fearing that the interest rates offered on digital asset products would reduce banks’ market share.

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