The Stablecoin Loophole That Could Rewrite Banking

Stablecoins are back in Washington’s crosshairs.

A coalition of major US banking groups is urging Congress to strengthen the GENIUS Act, warning that a loophole in the law could allow issuers to offer yields through affiliates and drain trillions from bank deposits.

While policymakers debate how far to go, Ethereum’s rally past $4,600 has traders betting on $5K by month-end, even as liquidity shifts toward TRON’s USDT network.

And in the courts, one of crypto’s most infamous figures has admitted guilt, closing a chapter on the TerraUSD disaster.

The thread through it all is power and positioning, in regulation, in market flows, and in legal reckoning.

Each move this week could shape where capital goes next and how secure it will be when it gets there.

Never Miss a Game-Changing Crypto Play Again!

We now send our daily picks via text, too, so you’ll get the same powerful content right on your phone.

👉 Click here to get crypto picks by text so you’re always in the know.

Next AI Leaders (Sponsored)

The Trade War’s Next AI Winners

Trade tensions are reshaping the AI race — and not all companies are losing.

Some are perfectly positioned to capture market share and accelerate growth.

Our free report details 9 under-the-radar U.S.-based AI companies with the infrastructure, talent, and AI integration to thrive.

Don’t wait until Wall Street catches on.

Access the report here while it’s still free.

Market-Moving News

There’s plenty going on in crypto markets today. Some of the most interesting things are:

• US banking groups are urging Congress to tighten the GENIUS Act, warning that a loophole could let stablecoin issuers skirt yield restrictions and potentially trigger $6.6 trillion in deposit outflows.
  

• Ethereum is trading above $4,600 as traders bet on $5K by month-end, though analysts warn that growing liquidity flows to TRON’s USDT network could limit upside.
  

• Terraform Labs founder Do Kwon has pleaded guilty to conspiracy and wire fraud in the $60 billion TerraUSD collapse, agreeing to forfeit up to $19 million.

Policy battles, shifting liquidity, and high-profile legal reckonings are all converging to shape where capital flows next, and how secure it will be once it gets there.

Policy

US Bank Groups Push to Close GENIUS Act Stablecoin Yield Loophole 

A coalition of major US banking associations, led by the Bank Policy Institute, is urging Congress to amend the GENIUS Act to block what they call a “loophole” that could let stablecoin issuers offer yields indirectly through affiliated platforms. 

In a letter sent Tuesday, the groups warned that yield-bearing stablecoins could siphon as much as $6.6 trillion from the traditional deposit base, disrupting credit creation for households and businesses.

The GENIUS Act already prohibits issuers from paying interest directly, but does not explicitly restrict partners such as exchanges.

This omission could allow firms like Coinbase or Kraken to reward stablecoin holders on behalf of issuers, effectively sidestepping the law. 

The bankers argue that stablecoins differ fundamentally from bank deposits or money market funds since they do not fund loans or securities purchases, making yield payments inappropriate.

While stablecoins represent just $280 billion of the US money supply, the Treasury projects the sector could reach $2 trillion by 2028. 

With Tether and USDC dominating more than 80% of the market, any policy change could have outsized effects on liquidity, competition, and cross-border payment adoption.

Markets

Polymarket Traders See $5K ETH by Month-End, but TRON Liquidity Shift Looms 

Ethereum is trading above $4,600 after a 10 percent daily surge, with Polymarket odds placing a 50 percent chance of hitting $5,000 by the end of August. 

Some traders are even betting on a break above $5,800 before month-end. The rally has cut Bitcoin’s dominance to 59 percent as capital flows into altcoins.

Behind the bullish momentum, however, data from CryptoQuant shows growing capital flight to TRON’s USDT network.

On August 9, a record $7.7 million worth of ETH was bridged to TRON and converted into stablecoins, part of a broader one-way flow that also includes USDC. 

Analysts warn that if these outflows persist, Ethereum’s long-term fee revenue and staking rewards could be pressured as DeFi activity settles elsewhere.

Glassnode notes ETH is approaching the $4.7K “Active Realized Price” level that triggered heavy selling in past cycles. 

For now, rate cut speculation and fresh inflows are keeping the rally intact, but the sustainability of higher valuations may hinge on retaining liquidity within Ethereum’s own ecosystem.

AI Stock Picks (Sponsored)

Discover 5 AI-Era Stocks Before Wall Street Piles In

Artificial Intelligence is transforming industries at lightning speed — and investors who spot the right opportunities early could see massive gains in the years ahead.

We’ve just secured exclusive free access to our newest investor briefing: The Top 5 AI Growth Stocks for 2025 and Beyond.

Inside, you’ll find:

• 5 high-upside AI companies positioned for significant expansion in the coming years.

• A “hidden gem” stock still flying under Wall Street’s radar.

• Expert analysis on why the AI sector could mirror the internet and smartphone booms.

Bank of America projects AI’s economic impact could surpass $15 trillion by 2030 — and those who position themselves early may stand to benefit most.

It’s 100% free, but only available for a short time.

[Click here to get your free copy now]

*This free resource is being sent by Zacks. We identify investment resources you may choose to use in making your own decisions. Use of this resource is subject to the Zacks Terms of Service.
*Past performance is no guarantee of future results. Investing involves risk. This material does not constitute investment, legal, accounting, or tax advice. Zacks Investment Research is not a licensed dealer, broker, or investment adviser.

Security & Risk

Terraform’s Do Kwon Pleads Guilty to Fraud in $60B UST Collapse 

Terraform Labs founder Do Kwon has pleaded guilty in US federal court to conspiracy and wire fraud charges tied to the 2022 collapse of the TerraUSD stablecoin, which erased $60 billion in market value. 

In exchange for his plea, the Department of Justice agreed to recommend a maximum sentence of 12 years, down from the potential 135 years across all original charges.

Kwon admitted he knowingly misled investors about the stability of UST, including concealing the role of a trading firm in restoring its peg. 

The plea deal also requires him to forfeit up to $19 million, surrender multiple properties, and pay restitution.

Charges remain pending in South Korea, where authorities have sought his extradition. The sentencing is set for December 11 in Manhattan.

The case caps years of regulatory pursuit following UST’s collapse, which became one of the most dramatic failures in crypto history and fueled global calls for stablecoin oversight.

Growth Picks Ready (Sponsored)

The Exclusive List of Five High-Upside Stocks for 2025

The difference between a “nice” return and a life-changing one often comes down to timing.

Right now, analysts have pinpointed five companies that could be on the verge of explosive growth.

These aren’t random picks — they’re the result of rigorous screening for fundamentals, growth potential, and technical momentum.

Past versions of this report have uncovered huge winners… but the window for these current picks is closing.

Get the free list today while it’s still available.

Future Forward

In crypto, the next big surge often takes shape long before the spotlight hits. Price action can be set in motion quietly, fueled by developments already scheduled on the horizon.

Tracking upcoming events, from network upgrades to exchange listings, can give you a head start on opportunities before they hit the mainstream radar.

Crypto Conferences:

💎 Finnovex West Africa 2025 (Aug 13, 2025)

💎 CryptoWinter 25 (Aug 13, 2025)

💎 Pragma New York 2025 (Aug 14, 2025)

Upcoming Airdrops:

🎁 VeChain (VET) Hayabusa Vote (Aug 18, 2025)

🎁 Commune AI (COMAI) Bridge Update Details (Aug 15, 2025)

🎁 Renzo (REZ) EzETH on Aave Vote (Aug 13-16, 2025)

Upcoming Token Launches:

🚀 EarnPark (PARK) Token Sale Tier 3 (Aug 29, 2025)

🚀 AfriCred (IFT) IDO on Spores (Aug 14, 2025)

🚀 Emmet Finance (EMMET) IDO on Spores (Aug 18, 2025)

Which event are you most excited for? Let us know!

Crypto Know-How: Inside the World of Coin Mixers

Coin mixers, sometimes called tumblers, are services that obscure the trail of cryptocurrency transactions.

Users send crypto into a mixer, where it is combined with other deposits and then redistributed to new wallet addresses.

This process breaks the on-chain link between sender and recipient, making it harder to trace funds on a public ledger.

Supporters view mixers as an important privacy tool.

Just as you would not want your employer, competitors, or strangers to have access to your entire banking history, you may not want every crypto transaction linked to your identity.

This is especially relevant as more real-world identities become connected to blockchain addresses.

In sensitive situations such as activism, journalism, or political dissent, protecting transaction details can be a matter of personal safety.

Regulators often take a different view.

Because mixers can anonymize funds, they have been used in significant money laundering cases, including cyberattacks tied to North Korea’s Lazarus Group.

Services such as Tornado Cash and Bitcoin Fog have processed billions of dollars in cryptocurrency, some of it linked to illicit activity. 

This has led to arrests, convictions, and government sanctions.

Tornado Cash, for example, was sanctioned by the U.S. Treasury in 2022, later removed from the sanctions list in 2025 after courts ruled its immutable smart contracts could not be classified as property.

Many mixers operate through smart contracts without custodial control, which means no individual or company holds the funds during the process.

Others are custodial, taking possession of deposits before redistributing them.

Both models are designed to sever transaction history, but non-custodial mixers depend entirely on automated blockchain code, making them harder to shut down.

Some new projects are attempting to provide privacy while also meeting compliance requirements. Railgun, for instance, uses a system called “Private Proof of Innocence” to block known bad actors from using its platform.

Whether such approaches will satisfy regulators is uncertain, but the discussion around crypto privacy is likely to continue for years.

For crypto users, mixers represent both an opportunity to protect lawful anonymity and a potential source of legal risk, depending on how and why they are used.

Everything Else

• Stablecoin regulations remain inconsistent across jurisdictions, with larger issuers reaping the biggest advantages.

• Bitcoin’s latest rally appears to follow historical cycle patterns, with analysts pointing to Ether’s parallel moves.

• Monero is grappling with a 51% attack vulnerability tied to a controversial network takeover by Qubic.

• Tom Lee’s BitMine is targeting up to $20 billion to expand its Ethereum accumulation.

• U.S. July CPI rose to 2.7%, but core inflation at 3.1% came in above forecasts, tempering rate cut optimism.