Bank of America CEO: Interest-Bearing Stablecoins Threaten $6 Trillion Deposit Exodus
Brian Moynihan warns that 30% of US bank deposits could flee to on-chain yield, forcing a legislative standoff that stalled the Senate’s crypto bill.
The $6 Trillion Warning
Bank of America CEO Brian Moynihan issued a stark warning to lawmakers during the bank’s Q4 earnings call on Wednesday: allowing stablecoins to offer yield could siphon up to $6 trillion in deposits out of the U.S. banking system.
Moynihan cited Treasury Department data indicating that if stablecoins are permitted to function like money market funds, passing 4-5% yields from Treasury-backed reserves to holders. Depositors will abandon traditional checking accounts en masse. Currently, national average savings rates hover near 0.1% to 0.4%, creating a massive arbitrage opportunity for on-chain assets.
"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, and that wholesale funding will come at a cost," Moynihan told analysts.
The Mechanics of the Fear
The banking sector’s anxiety stems from its fundamental business model: using cheap customer deposits to fund loans. If banks lose 30-35% of their deposit base to stablecoins, they must replace that capital with expensive wholesale funding. Moynihan argued this shift would force banks to raise interest rates on loans, disproportionately hurting small and medium-sized businesses.
The threat is not theoretical. While stablecoin issuers like Circle hold short-term Treasuries, the current regulatory grey area allows intermediaries (like exchanges) to pass that yield to users. Banks want this loophole closed permanently.
Coinbase Kills the Bill
The warning landed in the middle of a high-stakes legislative battle. On Wednesday, Coinbase CEO Brian Armstrong publicly withdrew support for the Senate’s pending market structure legislation (the CLARITY Act), explicitly citing provisions that would “kill rewards on stablecoins.”
Armstrong’s refusal to back the bill, calling it “materially worse than the status quo”, had an immediate kinetic effect. The Senate Banking Committee was forced to postpone the bill’s markup scheduled for Thursday, effectively stalling the legislation. The impasse highlights the widening chasm between Wall Street’s need to protect its deposit moat and crypto’s push for yield-bearing internet money.
