Part 2
The dispute centers on whether yield-bearing stablecoins pose a systemic threat to the traditional banking system. The banking lobby argues that allowing stablecoins to offer returns could siphon deposits away from banks, undermining their role in credit creation and financial intermediation.
This concern has been echoed by senior banking executives. Earlier this month, Bank of America CEO Brian Moynihan warned that as much as $6 trillion in deposits could potentially migrate from banks into interest-bearing stablecoins if such products were permitted to operate freely.
Although the GENIUS Act, passed last year, prohibits stablecoin issuers from directly offering interest or yield to holders, the ABA’s Community Bankers Council has raised alarms about what it describes as a loophole in the legislation. In a letter sent to lawmakers in early January, the council argued that stablecoin issuers could still effectively provide yield through third-party arrangements, thereby undercutting traditional banks despite the formal prohibit
