Banks Warn Stablecoins Could Drain $6.6 Trillion from Deposits
Wall Street banking groups warn that stablecoins could drain up to $6.6 trillion from deposits, impacting banks' ability to fund loans. This may result in:
- Higher interest rates
- Fewer loans
- More expensive credit for households and businesses
Analysts draw parallels to the 1980s when money market funds attracted savers away from banks. Lenders may need to increase deposit rates or depend on costlier wholesale funding, raising concerns particularly among smaller banks.
Banks are lobbying Congress to amend the GENIUS Act, aiming to prevent crypto firms from offering yields and stop state-chartered crypto banks from expanding. In contrast, crypto advocates claim banks seek to protect their interests, arguing stablecoins enhance innovation and consumer choice.
The conflict extends to data rights and asset tokenization, with Wall Street asserting that new digital products must adhere to traditional market regulations. However, momentum is shifting towards crypto, supported by significant political backing and lobbying efforts, escalating the conflict into a major turf war.