Bank of America CEO Sounds Alarm: $6 Trillion in Bank Deposits Could Flee to Stablecoins

Traditional finance's fortress walls are shaking. The CEO of one of the world's largest banks just issued a stark warning that could signal a tectonic shift in where the world stores its value.

The $6 Trillion Question

Forget niche crypto speculation—this is about the bedrock of the banking system: deposits. The sheer scale of the potential migration, a figure that dwarfs the GDP of most nations, isn't a distant prediction. It's a clear and present vulnerability now on the radar of the very institutions that could lose the most.

Why the Money Might Move

The appeal cuts through traditional finance's red tape. Stablecoins promise near-instant settlement, global accessibility, and programmable utility—features that legacy systems struggle to match at scale. Why wait three days for a cross-border wire when a blockchain settles in seconds? For corporations and individuals alike, efficiency is a powerful lure.

The Banking Counterplay

Expect a dual strategy: public caution paired with frantic internal innovation. Banks will tout their security and regulatory safeguards while racing to build or integrate their own digital asset rails. The goal? To offer crypto-like speed without ceding control. Whether they can move fast enough remains the multi-trillion-dollar gamble—after all, banks are better at forming committees than at disruptive innovation.

The warning shot has been fired. The next phase isn't about if digital assets will reshape finance, but how violently the old guard will be forced to adapt. The flow of capital has a history of finding the path of least resistance, and right now, that path is being paved with code.

Banks Warn Stablecoin Yields Could Speed Deposit Outflows

At issue is whether issuers should be allowed to offer yield on stablecoin balances, a feature banks argue could accelerate deposit outflows by giving consumers a bank-like product without bank-style regulation.

According to Moynihan, many stablecoin models resemble money market mutual funds rather than traditional deposits.

Reserves are typically held in short-term instruments such as U.S. Treasurys, rather than recycled into lending for households and businesses.

That dynamic, he said, could shrink the deposit base banks rely on to fund loans across the economy.

“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 said, adding that alternative funding sources WOULD likely come at a higher cost.

Lawmakers are now racing to settle these issues as the Senate Banking Committee works on a negotiated crypto market structure bill.

Bank of America CEO on why stablecoins shouldn't pay interest:

(TLDR: consumers shouldn't earn yield so banks can)

Quick summary:
Interest on stables -> mass deposit flight
Fully reserved money -> no fractional leverage
Banks lose free funding -> profits go bye bye! https://t.co/WE5P7F6V48 pic.twitter.com/2ebBx82NE9

The latest draft, released Jan. 9 by committee chair Tim Scott, includes language that would bar digital asset service providers from paying interest or yield to users simply for holding stablecoins.

At the same time, the proposal allows activity-based rewards tied to functions such as staking, liquidity provision or posting collateral, drawing a clear line between passive balances and active participation.

Pressure on the bill has intensified as the committee faces tight legislative timelines. More than 70 amendments were filed ahead of a planned markup this week, reflecting heavy lobbying from both banking groups and crypto firms.

Other unresolved issues include proposed ethics provisions, which gained attention following reports that President Donald TRUMP earned hundreds of millions of dollars from family-linked crypto ventures.

Galaxy Research Warns Crypto Bill Could Expand Treasury Surveillance

The draft has also sparked concern outside the banking sector. A recent report from Galaxy Research warned the bill could significantly expand Treasury Department surveillance powers over digital asset transactions.

Meanwhile, industry support has begun to fracture. Coinbase CEO Brian Armstrong said Wednesday the exchange could not back the bill, citing provisions he argued would effectively eliminate stablecoin rewards.

Later that day, Scott announced the committee had postponed the scheduled markup, saying negotiations were ongoing and that “everyone remains at the table working in good faith.”