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- Bank of America says stablecoins could drain up to $6 trillion from U.S. bank deposits.
- Senate draft seeks to ban passive interest on stablecoins amid rising industry pressure.
- Coinbase and analysts warn the bill expands oversight and restricts stablecoin rewards.
Stablecoin policy moved into sharper focus after Bank of America CEO Brian Moynihan warned that U.S. banks could lose trillions of dollars in deposits under certain regulatory decisions. His comments highlighted growing tension between the banking sector and the fast-expanding digital-asset industry.
Moynihan issued the warning during the bank’s Wednesday earnings call. He said Treasury Department studies show that as much as $6 trillion in deposits could migrate into stablecoins. That figure represents nearly one-third of all commercial bank deposits in the United States.
He linked the potential shift to the ongoing debate over interest-bearing stablecoins. Lawmakers are considering whether issuers should be allowed to pay yield on customer balances. Banks argue that such products would operate like deposit substitutes without meeting banking-sector standards.
Stablecoin Reserves Resemble Money Market Funds
Moynihan said several stablecoin structures resemble money market mutual funds. Their reserves are often held in short-term U.S. Treasurys. They are not used for lending to households or businesses. That difference could weaken the deposit base banks depend on to support credit across the economy.
He warned that deposit losses would force banks to replace funding. They may turn to wholesale markets. Those markets typically carry higher costs. Higher funding costs could then affect lending conditions and increase pressure on borrowers.
The remarks come as the Senate Banking Committee works on a negotiated crypto market structure bill. A new draft was released on January 9 by committee chair Tim Scott. It includes language that would block issuers and service providers from paying passive interest on stablecoin holdings.
Also Read: Russia Set to Open Crypto Market to Retail Investors With Strict Trading Limits Ahead
The proposal still permits rewards tied to specific functions. These include staking, liquidity activity, and collateral-based participation. The framework aims to separate passive yield from activity-based incentives.
Galaxy Warns Draft Bill Could Expand Treasury Surveillance Powers
Lawmakers face significant time pressure. More than 70 amendments were filed before the planned markup. The volume of proposals shows the level of lobbying from banks, digital-asset firms, and policy groups.
Ethics-related issues also remain unresolved. Reports surfaced about President Donald Trump earning large sums from crypto ventures linked to his family. Those reports have increased scrutiny of proposed ethics provisions in the bill.
Galaxy Research also issued a cautionary note. In its latest report, Galaxy warned that it might extend Treasury Department oversight of digital asset transactions. The language could expand federal surveillance authorities in the sector, the group said.
And industry agreement on the bill is eroding. Coinbase CEO Brian Armstrong said the firm was unable to get behind the legislation. He cited language that would characterize stablecoin rewards as payments. He said those limitations would hit the core features that many customers used.
Later Wednesday, Scott delayed the markup. He said negotiations were continuing. “They are working to resolve differences in the bill,” he added, referring to committee members.
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