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A Columbia Business School professor said banking industry warnings over stablecoin yields are based on unsubstantiated claims.
Omid Malekan argued that Congress should prioritise consumers rather than protecting bank profits as crypto legislation advances.
Most of the concerns bouncing around Washington are based on unsubstantiated myths.
Omid Malekan said.
Malekan said progress on crypto market structure legislation is being slowed by disputes over stablecoin yields.
The central issue is who benefits from interest earned on stablecoin reserve assets.
Banking lobby groups have described shared stablecoin yields as a loophole that could trigger deposit flight.
Critics claim consumers earning around 5% on stablecoins could withdraw funds from low-yield bank accounts.
Malekan said stablecoin growth does not necessarily reduce bank deposits.
He argued that global demand for stablecoins could actually increase deposits held in US banks.
Stablecoin issuers must hold reserves in Treasury bills and bank accounts, creating additional banking activity.
Malekan said stablecoin competition would pressure bank profits rather than undermine lending.
He noted banks could respond by offering higher interest rates to savers.
The national average savings rate remains below 1%, according to industry data.
Malekan said banks provide only a minority share of total US credit.
He argued that most lending comes from non-bank sources that could benefit from cheaper payments enabled by stablecoins.
Claims that community banks are most at risk from stablecoins were also rejected.
It’s the large money centre banks that are more vulnerable.
Omid Malekan said.
He said savers deserve equal consideration alongside borrowers in financial policy debates.
Malekan warned that blocking yield-sharing mainly protects bank margins at the expense of consumers.
He urged lawmakers to support innovation and competition in digital finance.
Congress has done a great job of putting American progress ahead of corporate interests so far; it shouldn't stop now.
Omid Malekan said.