US Banks Name Stablecoin Yields a Top Threat in 2026 Policy Agenda

Highlights:

• Banks have made stablecoin oversight their top priority for 2026 amid concerns about deposit losses.
• Lawmakers are facing pressure to restrict stablecoin yields as banking and crypto groups clash.
• Crypto firms have rejected tighter rules and have warned against limits that favor traditional banks.

The American Bankers Association has elevated stablecoin oversight to the top of its 2026 policy agenda. The trade group said payment stablecoins pose a direct challenge to traditional deposit funding. The bank representatives warned lawmakers that unchecked growth could weaken local lending activity. They said that the issue affects banks of all sizes across the United States.

The association called on Congress to prohibit interest, yield, or reward programs linked to stablecoins. It argued that incentive structures could encourage customers to treat stablecoins like deposits. Bank leaders stated that this shift would reduce the funds available for lending. They also said stablecoins lack the safeguards that apply to insured bank deposits.

ABA President and CEO Rob Nichols said the policy agenda reflects industrywide consensus. He said all 52 state bankers’ associations contributed to the priorities. According to Nichols, the focus centers on maintaining access to credit and economic stability. The association placed stablecoin oversight ahead of fraud prevention and regulatory indexing.

Banking groups framed the issue as a structural concern rather than a technology debate. They said payment tools should not replicate banking functions outside existing safeguards. Lawmakers are reviewing how digital assets fit within the financial frameworks.

Lawmakers Face Pressure Over Stablecoin Yields and Deposit Risks

Bank executives have intensified warnings over stablecoin yields and potential deposit losses. They said interest-like incentives could redirect customer funds away from banks. Bank of America CEO Brian Moynihan estimated that as much as $6 trillion could migrate. He said permissive regulation would accelerate that movement.

Community bankers echoed those concerns in communications sent to Congress. They argued that the current law allows stablecoin issuers to fund yield indirectly. The group described this structure as a loophole. They asked lawmakers to address the issue through clearer statutory language.

Senate negotiations on the digital asset market structure bill have stalled. The draft proposals seek to prohibit rewards paid solely for holding stablecoins. However, some versions still allow incentives tied to activities like liquidity provision. That distinction has divided lawmakers and industry groups.

JPMorgan CFO Jeremy Barnum raised similar concerns during the bank’s earnings call. He warned that interest-bearing tokens could resemble deposits without oversight. Barnum described the risk as the emergence of a parallel banking system.

Crypto Firms Push Back on Payment Stablecoin Rules

Crypto and fintech firms have mobilized against expanded restrictions on stablecoin incentives. A coalition of 125 companies submitted objections to lawmakers in December. The group included Coinbase, PayPal, Stripe, Ripple, and Kraken. It said the proposed limits favor banks rather than consumers.

The coalition compared stablecoin yields to credit card incentive programs. It noted that banks face no restrictions on card rewards. Members argued that lawmakers should apply consistent standards across payment products. They warned uneven rules could slow innovation.

Circle CEO Jeremy Allaire dismissed the issue of deposit flight at a World Economic Forum panel. He indicated that the same arguments appeared when money market funds were emerging. The growth of those products did not jeopardize bank lending. Allaire stated that stablecoin rewards operate under current business agreements. Brian Armstrong, the CEO of Coinbase, also indicated that they were against the strict prohibitions. He claimed that the company could not back laws that would remove stablecoin rewards.

The Senate Banking Committee may delay further work until late February or March. Meanwhile, the Senate Agriculture Committee is planning a markup on January 27. That proposal excludes payment stablecoins from CFTC authority. Oversight would instead rely on existing frameworks such as the GENIUS Act.

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