Bank Of America CEO’s $6T Stablecoin Warning Ignites Regulatory Firestorm
Wall Street's old guard just sounded the alarm—and the crypto world is listening.
Stablecoins: The $6 Trillion Shadow Banking System
Forget niche digital cash. The CEO of Bank of America paints a picture of a parallel financial universe brewing right under regulators' noses. We're talking about a potential $6 trillion rewards ecosystem built on stablecoins—digital assets pegged to traditional currencies like the dollar. That figure isn't speculative moon math; it's the bank's own staggering projection for where this could go if adoption hits escape velocity.
The regulatory debate isn't just heating up; it's at a boiling point. On one side, you have legacy institutions waving red flags about systemic risk and consumer protection. On the other, crypto-native builders see a revolutionary tool for instant, global settlements—something the traditional plumbing can't match. The question isn't *if* stablecoins will be regulated, but *how*. Will the rules foster innovation or freeze it out?
This isn't a theoretical debate. Real money is moving. Corporations are eyeing stablecoins for treasury management. Payment giants are integrating them. The very rewards programs the Bank of America CEO warns about could dismantle traditional customer loyalty models, bypassing banks entirely. It's a direct challenge to a core, high-margin revenue stream for the old system.
So, brace for impact. The coming months will define whether stablecoins become a sanctioned pillar of finance or remain in regulatory purgatory. One thing's certain: the genie isn't going back in the bottle. The traditional finance playbook—move slow, charge fees—looks increasingly like a roadmap for irrelevance.
After all, what's a few trillion between friends? Especially when the 'friends' are legacy banks watching their lunch get eaten.
Banking System Could Face $6 Trillion Problem
On Wednesday, Bank of America CEO Brian Moynihan told investors that the banking industry could face significant challenges if the US Congress does not prohibit interest-bearing stablecoins.
During its Q4 earnings call, the executive affirmed that up to $6 trillion in deposits, around 30% to 35% of all US commercial bank deposits, could Flow out of the banking system and into the stablecoin sector, citing Treasury Department studies.
The banking sector has heavily criticized the US’s landmark stablecoin legislation, the GENIUS Act, for months, claiming that it has loopholes that could pose risks to the financial system. Notably, the crypto framework prohibits interest payments on the holding or use of payment-purpose stablecoins but only addresses issuers.
Multiple banking associations across the US sent a joint letter to the Senate Banking Committee urging Congress to amend the law to include digital asset exchanges, brokers, dealers, and related entities.
According to the call’s transcript, Moynihan compared the digital assets to money market mutual funds, which require reserves to be held in short-term instruments, such as US Treasuries, thereby reducing lending capacity in the system.
That is the bigger concern that we’ve all expressed to Congress as they think about this, if you MOVE it outside the system, you’ll reduce the lending capacity of banks. (…) And 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 that will increase the cost of borrowing.
The CEO asserted that Bank of America WOULD not be affected by this issue, as the institution would be able to “meet customer demand, whatever may surface.” However, he noted that it would particularly hurt small- and medium-sized businesses, as they’re “largely lent to end consumers by the banking industry.”
Stablecoin Rewards Debate Intensifies
Moynihan’s remarks come amid the Senate’s struggles with the long-awaited market structure bill. The recently shared draft, which was scheduled for a markup today, has raised concerns among crypto industry leaders, who have outlined multiple problems with the bill.
Coinbase’s CEO, Brian Armstrong, took to X to share his disappointment with the legislation, affirming that “this version would be materially worse than the current status quo. We’d rather have no bill than a bad bill.”
He affirmed that, after reviewing the bill’s draft, Coinbase could not support it in its current state, arguing that there were “too many issues.” Among the problems, he noted the de facto ban on tokenized equities, crucial DeFi prohibitions, the “erosion” of the Commodity Futures Trading Commission (CFTC)’s authority, and the policies regarding the payment of interests on stablecoins.
As reported by Bitcoinist, this version of the market structure bill introduced key restrictions for stablecoin issuers. Under the proposed changes, issuers would be able to offer rewards for specific actions, such as account openings and cashback.
However, they are prohibited from offering interest payments to passive token holders. To Armstrong, this “would kill rewards on stablecoins,” and allow banks to “ban their competition.”
Amid the intensified backlash, Senate Banking Committee Chairman Tim Scott announced on Wednesday that the bill’s markup had been postponed to “deliver clear rules of the road that protect consumers, strengthen our national security, and ensure the future of finance is built in the United States.”
