Bank of America CEO Brian Moynihan warned that interest-bearing stablecoins could siphon as much as $6 trillion—roughly 30–35% of U.S. commercial bank deposits—out of the traditional banking system.
Moynihan, Bank of America CEO, argued the model for interest-bearing stablecoins resembles money market mutual funds: reserves are parked in short-term, low-risk instruments such as U.S. Treasury bills instead of being mobilized into loans for households and businesses. That structural similarity, he said, would let deposits drift outside banks and shrink the deposit base that funds lending.
The immediate implication, per his warning, is a compression of banks’ low-cost deposit funding. Banks would then have to replace withdrawn deposits with higher-cost wholesale funding, a change that would push up borrowing costs and potentially constrain credit availability for small and medium-sized enterprises.
The warning crystallized an ongoing policy fight over whether digital tokens that pay yield should be treated as direct competitors to bank deposits and whether lawmakers should curb that yield to protect the existing credit intermediation model.
What Moynihan said and the mechanics he highlighted
The banking sector has responded by lobbying for legislative measures designed to limit the yield advantage of stablecoins. Provisions under discussion in bills such as the CLARITY Act (also referred to as the GENIUS Act in industry commentary) would prohibit interest payments on idle stablecoin balances—an attempt to blunt direct competition with retail deposits.
Opponents warn that such restrictions could stifle innovation and create an uneven playing field that favors incumbent banks. Critics also highlighted regulatory gray areas: exchanges and crypto platforms could still deliver yield indirectly via third-party arrangements, preserving the effective return for users while sidestepping a direct ban.
Commentators cited a compromise in the bill that would permit rewards only for active participation—for example, liquidity provision—rather than passive yield on idle balances.
For markets and participants the immediate yardstick will be legislative momentum. The outcome of CLARITY Act negotiations will determine whether interest-bearing stablecoins remain a viable channel for yield or face constraints that preserve bank deposit economics.
