Banks Step Up Pushback Against Yield-Bearing Stablecoins as Threat to Deposits
Forecast Trend Report by Period
Yield-bearing stablecoins are expanding rapidly, escalating tensions between traditional finance and the crypto industry.
Katana reported on June 7 that banks have started to view yield-bearing stablecoins as a key rival to their core deposit business. Lobbying around the rules is also intensifying as the U.S. Congress debates bills on stablecoins and crypto market structure.
Crypto analyst EGRAG CRYPTO said banks no longer see stablecoins merely as a regulatory issue. They now regard them as a threat to the lending business itself.
Banks pay less than 1% on customer deposits, then use that money to make loans at rates of as much as 28%, he said. Stablecoins backed by short-term U.S. Treasuries, by contrast, can offer users roughly 5% returns while enabling self-custody and instant global transfers.
Yield-bearing stablecoins have become one of the fastest-growing segments of digital finance. Their use now extends beyond payments to corporate treasury management, cross-border remittances and decentralized finance, or DeFi.
The global stablecoin market is now worth more than $320 billion. Tether's USDT remains the largest with a market value of about $188 billion, followed by Circle's dollar-denominated stablecoin USDC at about $76 billion.
Banks are closely tracking that growth. Standard Chartered has said U.S. banks could lose as much as $500 billion in deposits by 2028 if stablecoin adoption accelerates.
During recent Senate Banking Committee discussions of the CLARITY Act, the banking industry also strongly opposed provisions that would allow interest payments on stablecoins, Katana reported. Some lawmakers criticized banks for trying to curb competition from stablecoins to protect their low-rate deposit model.
