Professor dismisses banks’ stablecoin yield fears as myths

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.