Bank of America CEO Brian Moynihan has warned that stablecoins could remove billions of dollars from the US banking system, highlighting growing tensions between traditional lenders and the digital assets sector.
Key points to remember:
- According to the CEO of Bank of America, up to $6 trillion in US bank deposits could be moved to stablecoins.
- Banks warn that yield-bearing stablecoins could drain deposits and limit lending.
- Lawmakers are working to reduce stablecoin yields as a crypto bill nears its deadline.
Speaking during the bank’s earnings call on Wednesday, Moynihan said that up to $6 trillion in deposits, or about 30% to 35% of all U.S. commercial bank deposits, could migrate to stablecoins under certain regulatory conditions.
Moynihan said the estimate was based on Treasury Department studies and linked the potential change to an ongoing legislative debate over interest-bearing stablecoins.
Banks warn that stable yields could accelerate deposit outflows
The question is whether issuers should be allowed to offer a yield on stable balances, a feature that banks say could accelerate deposit outflows by offering consumers a bank-like product without bank-like regulation.
According to Moynihan, many stablecoin models resemble money market mutual funds rather than traditional deposits.
Reserves are typically held in short-term instruments such as U.S. Treasuries, rather than recycled into loans to households and businesses.
This dynamic, he said, could reduce the deposit base that banks rely on to fund their lending across the economy.
“If you make deposits, they either won’t be able to lend or they’ll have to get wholesale financing,” Moynihan said, adding that alternative financing sources would likely be more expensive.
Lawmakers are now racing to address these issues as the Senate Banking Committee works on a negotiated crypto market structure bill.
The latest draft, released on January 9 by committee chairman Tim Scott, includes language that would prohibit digital asset service providers from paying interest or yields to users simply for holding stablecoins.
At the same time, the proposal allows for activity-based rewards related to functions such as staking, providing liquidity, or providing collateral, thus drawing a clear line between passive balances and active participation.
Pressure on the bill has intensified as the committee faces tight legislative deadlines. More than 70 amendments were tabled ahead of a planned increase this week, reflecting intense lobbying from banking groups and crypto companies.
Other unresolved issues include the proposed ethics provisions, which gained attention following reports that President Donald Trump made hundreds of millions of dollars from family-owned crypto businesses.
Galaxy Research Warns Crypto Bill Could Expand Treasury Oversight
The project has also raised concerns outside the banking sector. A recent report from Galaxy Research warned that the bill could significantly expand the Treasury Department’s oversight powers over digital asset transactions.
Meanwhile, industry support began to fracture. Coinbase CEO Brian Armstrong said Wednesday that the exchange could not support the bill, citing provisions that he said would effectively eliminate stablecoin rewards.
Later in the day, Scott announced that the committee had postponed the planned increase, saying negotiations were ongoing and “everyone remained at the table and worked in good faith.”
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