Bank of America CEO: Interest-Bearing Stablecoins Could Lead to $6 Trillion in Bank Deposit Outflows

Odaily News Bank of America CEO Brian Moynihan stated during the quarterly earnings call that interest-bearing stablecoins could lead to a $6 trillion outflow of deposits from the banking system and harm the credit capacity of small and medium-sized enterprises. Citing data from a U.S. Treasury Department report, Brian Moynihan pointed out that the financial structure of stablecoins is similar to money market mutual funds, with their reserves invested in low-risk securities such as short-term Treasury bonds, rather than being converted into bank loans. He believes that the widespread adoption of interest-bearing stablecoins will force banks to turn to more costly wholesale funding, thereby driving up overall borrowing costs. Currently, a draft cryptocurrency bill under discussion by the U.S. Senate Banking Committee proposes to prohibit idle stablecoins from generating interest.

Coinbase CEO Brian Armstrong posted on platform X, stating that due to provisions in the draft bill that include restrictions on stablecoin rewards, a substantial ban on tokenized stocks, and limitations on DeFi, Coinbase has formally withdrawn its support for the bill. Brian Armstrong accused the relevant amendments of aiming to eliminate competition faced by banks by canceling stablecoin rewards. As a result, the Senate Banking Committee has postponed the vote originally scheduled for January 15.