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In its ongoing debate with US lawmakers that it will hurt the banking industry’s competitiveness, cracking down on stablecoin yield has been a priority of the American Bankers Association (ABA) for 2026.
The ABA said Tuesday that one of its many priorities this year is to “stop payment stablecoins from becoming deposit substitutes that cut community bank lending by banning paying interest, yield or rewards regardless of the platform.” , ” and.
A list of five priorities topped the list, including fighting financial fraud, stopping arbitrary interest rate caps and indexing and mission-driven banks, was also prioritized by Stablecoin oversight. ABA CEO and president Rob Nichols said the priorities are based on input from banks and businesses of all sizes and models.
Banking exec says $6 trillion could move out of banks
A dispute between the association and crypto industry is whether yield-bearing stablecoins will withdraw deposits from traditional banks, which the bank lobby claims will weaken lending and erode banks’ role in the financial system.
Source: American Bankers Association
In a statement earlier this month, Bank of America CEO Brian Moynihan said up to $6 trillion could be flown out of banks into interest-paying stablecoins.
While the GENIUS Act, passed last year, prohibited stablecoin issuers from offering interest or yield to holders, in a letter to lawmakers in early January that ‘a so-called loophole of the laws could allow yield-bearing stable coins to undercut traditional banks’.
Circle CEO says concerns are “totally absurd”
The Community Bankers Council told the Senate it must put provisions in market structure legislation to tighten stablecoin rules so that issuers cannot offer yield through third parties.
However, crypto executives are convinced that allowing stablecoin yields will help more than it hurts.
Related: ‘Literally billions’ of AI agents to use stablecoins in 5 years: Circle CEO
Circle CEO Jeremy Allaire has dismissed fears that stablecoin yields could trigger bank runs as ‘totally absurd’. At the World Economic Forum in Davos, he said ‘They help with stickiness, they help to attract customers.
In contrast, analyst Anthony Scaramucci, founder of asset manager SkyBridge Capital, said a ban on yield-beating stablecoins “puts the US dollar at ‘a competitive disadvantage to China’s digital yuan, whose central bank digital currency is yielding.”
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