Debates over interest payments on stablecoins could change the very concept of consumer ‘money’ accounts amid tensions in the banking sector.
The confrontation over stablecoin regulation in Washington is increasingly reminiscent of the debate over bank deposits. Banks immediately see a familiar problem. The issue is about who actually controls customer funds.
Now the question is no longer whether tokens pegged to the dollar should exist. The debate has shifted. Should they be considered equivalent to deposits, especially if holders can receive rewards similar to interest simply for holding such assets?
A recent meeting at the White House was supposed to help ease tensions between banking and crypto associations. However, no agreement was reached. The main contentious issue remains the accrual of yield and bonuses on stablecoins.
Context is also important. Stablecoins have long ceased to be a narrow tool for traders and settlements between exchanges.
According to DeFiLlama, the total volume of stablecoins in circulation hit a new high in mid-January, reaching $311.3 billion.
At this scale, the discussion is no longer theoretical. It is about where the most stable and liquid ‘cash’ will be stored in the financial system and who will benefit from these balances.
Why Banks See Stablecoins as Competitors to Deposits
Banks are closely watching the stablecoin market because the current model effectively moves ‘deposit-like’ money off bank balance sheets and into short-term US government bonds.
For banks, deposits are cheap funding. Lending is built on them, and margins largely depend on them. Stablecoin reserves, on the other hand, are usually placed in cash and short-term Treasury bills. As a result, funds that previously remained in the banking system as deposits are moving into sovereign debt.
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Essentially, the distribution of roles is changing. Who earns, who acts as an intermediary, and who controls the customer base.
The situation becomes politically sensitive when the product starts to compete on yield. If stablecoins do not pay interest, they look like a settlement tool. It is simply a faster and more convenient payment technology.
But if they offer yield, directly or through platform bonuses perceived as interest, they start to resemble a savings product.
This is where banks see a direct threat to their deposit business, especially regional players who are highly dependent on retail deposits.
Standard Chartered recently tried to assess the scale of the risk. The bank warned that by the end of 2028, stablecoins could pull about $500 billion in deposits out of American banks. Regional banks will be hit the hardest.
The number itself is not as important as the signal. This is how banks and regulators model the next stage of market development.
In this logic, the crypto platform becomes a kind of front office for storing ‘cash,’ while banks move to the background or lose part of their balances entirely.
GENIUS and CLARITY Intertwined in the Yield Debate
A stablecoin law has already been passed in the US, and it has become the center of the current conflict.
President Donald Trump signed the GENIUS Act in July 2025. The law was conceived as a way to bring stablecoins into the regulatory field and at the same time support demand for US government debt through reserve requirements.
However, its full implementation has been postponed. Treasury Secretary Scott Bessent confirmed that the law can only be launched by July of this year.
This pause is one of the reasons why the debate over stablecoin yield has shifted to a discussion of market structure under the CLARITY initiative.
Banks argue that even if stablecoin issuers are restricted, third parties, including exchanges, brokers, and fintech companies, will be able to offer bonuses that effectively look like interest. This could draw customers away from insured bank deposits.
Therefore, the banking side is proposing a strict ban on any form of yield. According to their position, no one should provide payment stablecoin holders with financial or non-financial rewards related to the purchase, use, or storage of such tokens.
They also believe that any exceptions should be extremely limited so as not to provoke an outflow of deposits and not to weaken lending to the real sector.
Crypto companies, in turn, claim that bonuses and rewards are a necessary competitive tool. In their view, a ban would cement the dominance of banks and limit the ability of new players to compete for customer balances.
The tension has already slowed the legislative process.
Last month, Coinbase CEO Brian Armstrong said the company would not support the bill in its current form. Among the reasons, he cited restrictions on stablecoin rewards. This helped delay consideration of the initiative in the Senate Banking Committee.
Nevertheless, there is no unified position within the crypto industry.
Head of BitGo Mike Belshe believes there is no point in returning to the GENIUS discussion. In his opinion, the issue is already resolved, and any changes should be made through amendments. He also called not to stall CLARITY over a separate yield dispute, adding: ‘Get CLARITY done.’
The split between these two directions is already affecting the industry’s plans for 2026. At the same time, it determines how banks and crypto platforms are preparing for new rules that will decide who will control the main dollar balance of the consumer.
Three Scenarios for the Market and Three Different Sets of Winners
The current stalemate around stablecoins could be resolved in different ways. Each option will change the balance of power in the crypto industry and the financial sector in its own way.
First scenario: a strict ban on yield, beneficial to banks.
If Congress or regulators restrict passive rewards for simply holding tokens, stablecoins will finally shift toward settlements and payment infrastructure, not savings.
In this case, they will be used more actively by traditional players who need new settlement rails without direct competition with deposits.
A signal can be seen in the position of Visa. The company reported more than $3.5 billion in annual stablecoin settlements as of November 30, 2025, and in December expanded USDC settlements for US financial institutions.
In this scenario, stablecoins grow due to convenience and speed, not yield for holders.
Second scenario: a compromise between banks and crypto companies.
Lawmakers may allow activity-based bonuses, such as for payments or transfers, but restrict classic interest yield for holding.
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This will preserve incentives for users but increase compliance and disclosure requirements. Large platforms with scale and resources will benefit.
A side effect in this case is the transfer of yield into wrappers around the stablecoin. Income can be generated through tokenized money market funds, sweep mechanisms, and other products formally separated from the payment stablecoin balance.
Third scenario: prolonged status quo. If the dispute between banks and crypto companies drags on into 2026, bonuses will continue to exist long enough for the ‘cash account’ model based on stablecoins to become familiar.
In this case, the hypothesis of deposit outflows may be partially confirmed, especially if the yield gap remains significant for consumers.
However, such a scenario increases the risk of a tougher response from the authorities in the future. A sharp policy reversal is possible when the rules change after the distribution of customer balances has already shifted and the issue of deposit outflows becomes politically sensitive.
