Interchange attacks quelled, for now

ISOs and agents can breathe a sigh of relief now that two controversial laws targeting interchange have been taken off the table. An Illinois law, the Interchange Fee Prohibition Act, had been scheduled to take effect on July 1, 2025. An 11th-hour delay to July 1, 2026, has been approved by the Illinois General Assembly.

Now it's up to the governor, J.B. Pritzker, to sign or veto the legislation, which needs to happen within 30 days under state law, but it would need to be sooner, as July 1 is less than 30 days away.

And in related development, efforts by Senators Dick Durbin (D-IL) and Roger Marshall (R-Kan) to attach the Credit Card Competition Act to stablecoin regulation legislation – the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) failed, when a procedural vote kept the bill amendment free.

The CCCA was one of dozens of amendments that had been proposed for the legislation. Another, sponsored by Senator Josh Hawley (R-Mo) would have capped the all-in annual percentage rate on credit cards at 10 percent.

The GENIUS Act – regulating stablecoins

The GENIUS Act is intended to create a comprehensive federal regulatory framework for stablecoins, which are cryptocurrencies pegged to fiat currencies, most commonly the U.S. dollar. A vote on the bill could come before the full Senate as early as next week.

The stablecoin market is estimated at about $238 billion, according to CoinDesk, which keeps tabs on the crypto market.

Stablecoins are used in a number of ways, including to make payments at the point of sale. No one can say for sure how many merchants accept stablecoins, but one estimate, published by the publication Tron Weekly, puts the number at 32,000.

Introduced by Senator Bill Hagerty, R-Tenn, the GENIUS Act aims to provide a clear legal structure for the issuance and use of stablecoins, provide consumer protections, as well as improve financial stability and national security. It has bipartisan support as well as detractors on both sides of the political aisle.

"America urgently needs a clear and comprehensive regulatory framework for payment stablecoins," Sen. Hagerty said in a June 11 speech on the Senate floor. "For too long, the lack of any such framework has forced digital asset innovation beyond our borders and into foreign countries, jeopardizing our nation's financial leadership and putting American consumers at risk."

Safeguards versus loopholes

He said that the bill, if enacted, would establish rigorous safeguards to deter illicit activity, increase transparency, ensure safety and stability, reduce friction in payments, and provide consumer protections.

"The benefits of stablecoin innovation are immense," Hagerty added. "By reducing friction in the payment process they can improve the speed and efficiency of cross-border payments. Faster and cheaper transactions can unlock much needed working capital for American businesses and provide individuals with more effective tools for making international payments."

Senator Elizabeth Warren, D-Mass., in a Senate floor speech that same day, panned the legislation, likening it to the Commodity Futures Modernization Act, which mainstreamed derivatives in the early 20002. Derivatives have been identified as a major contributor to the 2008 market crash.

"The GENIUS Act is riddled with loopholes and contains weak safeguards for consumers, national security and financial stability," Sen. Warren argued. She also brought up President Trump's crypto business, World Liberty Financial, which has launched its own stablecoin, USD.

"That stablecoin is already the 5th largest stablecoin in the world and foreign investors have begun to exploit this avenue for corruption," she asserted. And that was just one of the problems she said she had with the bill.

Intense controversy around the GENIUS Act has led to delays in voting. Originally, it was scheduled for a vote just after Memorial Day.

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