Bank of America: Interest-bearing stablecoins could seize $6 trillion in bank deposits

The CEO of Bank of America, Moynihan, warned that if the U.S. Congress does not restrict interest-bearing stablecoins, up to $6 trillion in deposits could shift away from banks, which accounts for about 30% to 35% of total deposits in U.S. commercial banks.

Moynihan stated that the structure of stablecoins is similar to that of money market mutual funds, which hold reserves in short-term instruments (such as U.S. Treasury bills) rather than being used for bank loans like traditional banks. In this model, funds drift outside the traditional banking system, leading to a shrinking deposit base that banks rely on to support loans to households and businesses. This is also one of the most controversial issues in the CLARITY Act (the Crypto Market Structure Act).

The draft includes a provision that prohibits digital asset service providers from paying interest or yields to users solely for holding stablecoins. Notably, the bill distinguishes between activity-based rewards, allowing rewards to be linked to staking, providing liquidity, or offering collateral, while prohibiting rewards on idle balances in accounts.