Bank of America CEO Brian Moynihan has warned that stablecoins could pull trillions of dollars out of the US banking system, underscoring growing tensions between traditional lenders and the digital asset industry.
Speaking during the bank’s Wednesday earnings call, Moynihan said as much as $6 trillion in deposits, roughly 30% to 35% of all US commercial bank deposits, could migrate into stablecoins under certain regulatory outcomes.
According to Moynihan, many stablecoin models resemble money market mutual funds rather than traditional deposits. Reserves are typically held in short-term instruments such as U.S. Treasurys, rather than recycled into lending for households and businesses.
At issue is whether issuers should be allowed to offer yield on stablecoin balances, a feature banks argue could accelerate deposit outflows by giving consumers a bank-like product without bank-style regulation.
“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,” Moynihan said, adding that alternative funding sources would likely come at a higher cost. Lawmakers are now racing to settle these issues as the Senate Banking Committee works on a negotiated crypto market structure bill.
That dynamic, he said, could shrink the deposit base banks rely on to fund loans across the economy.
At the same time, the proposal allows activity-based rewards tied to functions such as staking, liquidity provision or posting collateral, drawing a clear line between passive balances and active participation. Pressure on the bill has intensified as the committee faces tight legislative timelines. More than 70 amendments were filed ahead of a planned markup this week, reflecting heavy lobbying from both banking groups and crypto firms.
The latest draft, released Jan. 9 by committee chair Tim Scott, includes language that would bar digital asset service providers from paying interest or yield to users simply for holding stablecoins.
Meanwhile, industry support has begun to fracture. Coinbase CEO Brian Armstrong said Wednesday the exchange could not back the bill, citing provisions he argued would effectively eliminate stablecoin rewards.
The draft has also sparked concern outside the banking sector. A recent report from Galaxy Research warned the bill could significantly expand Treasury Department surveillance powers over digital asset transactions.
