Bank of America (NYSE:BAC) CEO Brian Moynihan has warned that allowing interest-bearing stablecoins could pull up to $6 trillion in deposits out of banks.
Why Banks Are Fighting Stablecoin Yields
Moynihan said on the bank’s earnings call on Wednesday that stablecoins structured like money market funds would pull deposits out of the banking system, forcing banks to rely on expensive wholesale funding instead of cheap customer deposits.
The issue is simple: if stablecoins offer 4% yield while banks pay 0.1% on savings accounts, depositors will move their money on-chain.
Banks would lose their free funding source and either cut lending or borrow from the Fed at market rates, driving up loan costs for businesses and consumers.
“If you take out deposits, they’re either not going to be able to loan or they’re going to have to get wholesale funding, and that wholesale funding will come at a cost,” Moynihan said.
Senate Bill Bans Passive Interest, Allows Staking Rewards
The Senate crypto market structure bill released January 9 by Banking Committee Chair Tim Scott (R-SC) includes a ban on paying interest for merely holding stablecoins.
The bill allows activity-based rewards like staking, liquidity provision, or collateral posting, but blocks yield on idle balances.
Lawmakers filed more than 70 amendments ahead of Wednesday's planned markup, underscoring intense lobbying from both banks and crypto firms.
Coinbase Pulls Support, Markup Gets Postponed
Coinbase Global Inc (NASDAQ:COIN) CEO Brian Armstrong announced Wednesday the exchange cannot support the bill, saying provisions would “kill rewards on stablecoins.”
Senate Banking Committee Chair Tim Scott postponed the markup later Wednesday, stating “everyone remains at the table working in good faith.”
Democrats have also pushed for ethics provisions after reports showed President Donald Trump generated roughly $620 million from family crypto ventures.
Why This Matters For Crypto
Getting yield-bearing stablecoins approved would unlock massive capital flows from traditional banking into on-chain assets.
But banks are lobbying hard to protect their deposit franchise, viewing stablecoins as an existential threat to their lending capacity and profit margins.
The legislative fight determines whether crypto competes directly with banks for deposits or remains locked out of offering basic savings account features.
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