bankdeposits

🟡 BofA CEO Warns Up to $6 Trillion Could Flow to Interest-Paying Stablecoins

Bank of America CEO Brian Moynihan cautioned that if stablecoins were allowed to pay interest or yield, as much as $6 trillion — roughly 30 %–35 % of U.S. commercial bank deposits — could shift out of the traditional banking system and into stablecoin products. He raised these concerns amid current U.S. Senate discussions on stablecoin regulation and the potential impact on bank deposits, lending capacity, and credit availability.

Key Facts:
💼 $6 trillion risk: Treasury-referenced studies suggest a massive potential outflow of deposits if interest-bearing stablecoins are permitted.

🪙 Stablecoin yields debate: Ongoing legislative talks could ban passive interest on stablecoin holdings while allowing activity-based rewards like staking or liquidity provision.

📉 Banking impact: Moynihan said such a migration could shrink bank deposits and reduce lending capacity, especially to small and medium-sized businesses.

🏛️ Regulatory context: The U.S. Senate Banking Committee is negotiating bill language on how stablecoins can pay yields or rewards without undermining the banking system.

Expert Insight:
Moynihan’s warning highlights how yield-paying digital assets could compete with traditional banking deposits — potentially reshaping where consumer funds are held and how banks operate — and why regulators are considering rules to manage this shift.

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🟡 BofA CEO Warns Up to $6 Trillion Could Shift to Interest-Bearing Stablecoins

Bank of America CEO Brian Moynihan warned that permitting stablecoins to pay interest could trigger a massive migration of up to $6 trillion from U.S. commercial bank deposits—representing about 30%–35% of total deposits—into these digital assets. The caution came during the bank's recent earnings call, as U.S. Senate Banking Committee negotiations continue on crypto market structure legislation, particularly rules around stablecoin yields and their effects on the banking sector.

Key Facts:
💼 $6 trillion at stake: Moynihan cited U.S. Treasury Department studies estimating that interest-paying stablecoins could draw this volume of deposits away from traditional banks.
🪙 Yield restrictions in focus: Current Senate bill drafts aim to prohibit passive interest on stablecoin holdings while potentially permitting activity-linked rewards, such as those from staking, transactions, or liquidity provision.
📉 Potential banking consequences: A large-scale deposit shift could reduce banks' lending capacity, force reliance on costlier wholesale funding, and raise borrowing costs—hitting small and medium-sized businesses hardest.
🏛️ Legislative backdrop: Amid intense lobbying from banks and crypto firms, the Senate Banking Committee recently delayed a markup on the bill as negotiations persist over stablecoin reward provisions and broader crypto rules.

Expert Insight:
Moynihan's alert underscores the competitive threat yield-bearing stablecoins pose to traditional deposits, likening them to money market mutual funds that hold reserves in low-risk assets rather than fueling loans. This highlights why lawmakers are weighing safeguards to prevent destabilizing outflows from the regulated banking system while advancing crypto innovation.

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