Bank of America Flags $6 Trillion Stablecoin Risk; Senate Delays Crypto Bill

Bank of America CEO Brian Moynihan issued a stark warning to Wall Street and Washington on Wednesday, claiming that interest-bearing stablecoins could drain up to $6 trillion from the U.S. banking system. The projection, roughly 35% of all commercial bank deposits, was cited during the bank’s Q4 2025 earnings call as a primary reason for the industry’s aggressive lobbying against stablecoin yields.

The warning landed just hours before the Senate Banking Committee postponed its scheduled markup of the Digital Asset Market Clarity Act. The delay follows a breakdown in consensus, precipitated by Coinbase CEO Brian Armstrong withdrawing support for the legislation.

The $6 Trillion Arbitrage

Moynihan’s figure is not random; it represents the existential threat traditional finance (TradFi) sees in compliant stablecoins. The logic is simple: U.S. banks currently pay an average of 0.39% on savings accounts, while short-term Treasuries yield nearly 4%.

If stablecoin issuers are permitted to pass that yield directly to holders, rational capital would flee low-interest bank deposits for on-chain alternatives instantly. "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 noted, implying that the cost of credit for households and businesses would spike as cheap deposit funding evaporates.

Coinbase Walks Away

The banking lobby’s pressure to ban these "pass-through" yields forced legislative amendments that ultimately alienated the crypto sector. Coinbase CEO Brian Armstrong announced Wednesday that the exchange could no longer support the bill, citing a "de facto ban" on stablecoin rewards and tokenized equities.

"We’d rather have no bill than a bad bill… this version would be materially worse than the current status quo.", Brian Armstrong via X

The draft legislation reportedly prohibits service providers from paying interest solely for holding stablecoins, a model that banks argue mimics a money market fund without the requisite regulation. While the bill allows for "activity-based" rewards (e.g., staking or liquidity provision), industry leaders argue the language is too restrictive to support a competitive market.

Legislative Stalemate

Senate Banking Committee Chairman Tim Scott confirmed the delay late Wednesday, stating that "everyone remains at the table." However, the chasm is widening. On one side, incumbents like Bank of America demand protection for their deposit base ($6T at risk). On the other, crypto natives like Coinbase refuse to accept a regulatory framework that neuters the economic advantage of blockchain-based settlement.

For now, the bill is in limbo. The market reaction was muted, though the political signal is clear: the banking lobby has successfully framed stablecoin yields as a systemic risk to the U.S. credit engine, and they are winning the ear of the Senate.