US Banks Push for Stablecoin Yield Ban While Paying Depositors Nearly Nothing
Traditional banks want to outlaw the very yields they refuse to offer customers.
The Hypocrisy Play
Banks lobby regulators to ban stablecoin interest programs while paying depositors fractions of a percent. They call it 'consumer protection'—consumers call it profit protection.
The Yield Gap
Stablecoins deliver actual returns in a near-zero rate environment. Banks deliver excuses and monthly maintenance fees. Guess where the money's flowing?
Old Guard vs New Finance
This isn't about risk management—it's about competition. Banks can't compete with decentralized yields, so they're trying to regulate them out of existence.
Because nothing says 'financial innovation' like banning better returns for everyday people while protecting institutional profit margins.
Deposit Outflow to Stablecoins
The banking industry representatives, citing an April Treasury report, claimed that stablecoins could drain $6.6 trillion in bank deposits.
They warned of “greater deposit flight risk, especially in times of stress, that will undermine credit creation throughout the economy,” which could result in “higher interest rates, fewer loans and increased costs for Main Street businesses and households.”
Over the weekend, Politico reported that the financial world is “barreling toward a lobbying civil war in Washington.”
The bankers and lobbyists, who generally see crypto as a threat to their businesses, want to block all crypto companies from paying yield to customers who hold stablecoins, it stated. They also want to repeal a section of the law that they say “allows state-chartered uninsured depository institutions to operate nationwide without proper supervision.”
The banks “want to keep it for themselves,” which is “absolutely outrageous rent-seeking,” said crypto investor Ryan Sean Adams.
“Stablecoin yield belongs to the people, not the banks.”
Meanwhile, Bitwise CIO Matt Hougan saw the funny side, observing the paltry interest rates that leading banks are offering.
I think JPMorgan Chase is confused. Can someone tell them that the 0% interest rule is only for stablecoins, not bank accounts? https://t.co/cXIuWJJMeb pic.twitter.com/oj8b1zC3cC
— Matt Hougan (@Matt_Hougan) August 25, 2025
Crypto Industry Fights Back
Former commissioner of the Commodity Futures Trading Commission and current Blockchain Association CEO, Summer Mersinger, pointed out on Monday that the GENIUS Act is “settled law.”
“There was robust debate on the Hill, and the way this bill came out was a compromise from policymakers,”
“This was no loophole and you know it,” Coinbase chief legal officer Paul Grewal wrote on X in response to the bankers’ statement.
Meanwhile, the Crypto Council for Innovation wrote that banks were seeking to create an “uncompetitive payment stablecoin environment, protecting banks at the expense of broader industry growth, competition, and consumer choice.”
Bowing to banks’ demands WOULD “tilt the playing field in favour of legacy institutions, particularly larger banks, that routinely fail to deliver competitive returns and deprive consumers of meaningful choice,” the associations added.
Former Paxos consultant Austin Campbell said banks were trying to “cripple stablecoins” so that they could continue to,
“Pay you 0% on deposits while making risky loans to commercial real estate billionaires, paying themselves huge bonuses if it works and sticking you with the losses if it doesn’t.”
A timely reminder of why this all is important as banks begin lobbying to cripple stablecoins so that they can continue to:
1 – Pay you 0% on deposits while making risky loans to commercial real estate billionaires, paying themselves huge bonuses if it works and sticking you… https://t.co/atV5Jw5d4I
— Austin Campbell (@CampbellJAustin) August 25, 2025
