Bank of America (BAC) CEO Brian Moynihan just put a number on what keeps bankers up at night: $6 trillion. That's how much money he thinks could flee the traditional banking system if stablecoins start paying interest.
The Banking Model Banks Don't Want You to Think About
During the bank's earnings call on Wednesday, Moynihan laid out the problem in stark terms. If stablecoins get structured like money market funds, they'll siphon deposits away from banks, forcing lenders to replace that cheap funding with expensive wholesale borrowing.
The math is straightforward: when stablecoins offer 4% yields and your savings account pays 0.1%, money moves. And when banks lose deposits, they lose their cheapest source of funding. They'd either have to cut back on lending or borrow from the Fed at market rates, which means higher loan costs for everyone.
"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.
What the Senate Bill Actually Does
The crypto market structure bill that Banking Committee Chair Tim Scott (R-SC) released on January 9 tries to thread this needle. It bans paying interest just for holding stablecoins, but allows activity-based rewards like staking, providing liquidity, or posting collateral.
In other words, you can't earn yield on idle balances, but you can earn rewards if you're actually doing something with your tokens.
More than 70 amendments were filed ahead of Wednesday's planned markup, which tells you how much lobbying is happening behind the scenes from both banks and crypto companies.
Coinbase Walks Away and the Vote Gets Delayed
Coinbase Global Inc (COIN) CEO Brian Armstrong announced Wednesday that the exchange can't support the bill, saying the provisions would "kill rewards on stablecoins."
Later that same day, Tim Scott postponed the markup, saying "everyone remains at the table working in good faith."
Democrats have also been pushing for ethics provisions after reports showed President Donald Trump generated roughly $620 million from family crypto ventures.
What's Really at Stake
This isn't just regulatory theater. Allowing yield-bearing stablecoins would open the floodgates for capital to move from traditional banking into on-chain assets.
Banks understand this perfectly, which is why they're lobbying aggressively to protect their deposit franchise. They see stablecoins that pay competitive yields as a direct threat to their lending capacity and profit margins.
The outcome of this legislative fight will determine whether crypto gets to compete with banks for deposits or stays locked out of offering basic savings account features. And as Moynihan's $6 trillion estimate suggests, the stakes couldn't be higher.
