Bank of America CEO Brian Moynihan has warned that stablecoins could redirect trillions of dollars away from the US banking system, highlighting tensions between traditional banks and the digital asset sector.
Speaking during the bank’s Wednesday earnings call, Moynihan said up to $6 trillion in deposits, around 30% to 35% of all US commercial bank deposits, could shift to stablecoins under certain regulatory scenarios.
Moynihan noted that this estimate is based on Treasury Department studies and linked the potential outflow to ongoing debates over interest-bearing stablecoins.
Banks argue that yield-bearing stablecoins resemble bank deposits but lack the regulatory protections of traditional banking products, creating the risk of accelerated deposit outflows.
“Many stablecoin models resemble money market mutual funds rather than traditional deposits,” Moynihan said.
Reserves for these stablecoins are typically held in short-term instruments such as U.S. Treasurys, rather than being recycled into loans for households and businesses.
“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,” he added.
This alternative funding often comes at a higher cost for banks, potentially limiting lending capacity.
Lawmakers are currently debating legislation to limit passive yield on stablecoins while allowing activity-based rewards for staking, liquidity provision, or collateral posting.
The draft bill released by Senate Banking Committee Chair Tim Scott in early January drew more than 70 amendments ahead of a planned markup, reflecting intense lobbying by both banks and crypto firms.
Galaxy Research has raised concerns the bill could expand Treasury Department oversight of digital asset transactions.
Meanwhile, Coinbase CEO Brian Armstrong stated the exchange cannot support the bill as drafted, arguing that certain provisions would eliminate stablecoin rewards.
Scott later postponed the markup, saying negotiations are ongoing and all parties remain engaged in discussions to find common ground.
