Bank of America warns deposits may shift to stablecoins

Bank of America chief executive Brian Moynihan said up to $6 trillion in US bank deposits could move into stablecoins under certain legislative outcomes.

Moynihan said Treasury Department studies suggest this could represent 30% to 35% of total US commercial bank deposits.

He warned that interest-bearing stablecoins could significantly reduce the deposit base that supports bank lending.

“If you take out deposits, they’re either not going to be able to loan or they’re going to have to get wholesale funding, and that wholesale funding will come at a cost,”

Brian Moynihan said.

He compared stablecoin structures to money market funds that hold reserves in short-term assets rather than recycling funds into loans.

Lawmakers are debating restrictions on stablecoin yields within a revised crypto market structure bill.

The latest Senate draft would ban interest on idle stablecoin balances while allowing rewards tied to activities such as staking or liquidity provision.

More than 70 amendments were filed ahead of a planned committee markup, reflecting pressure from banks and crypto firms.