Bank of America CEO: Interest-Bearing Stablecoins Could Take $6T Out of Bank Deposits

Interest-bearing stablecoins could instrumentality $6 trillion retired of slope deposits according to Bank of America’s CEO, who argued that small-to-medium-sized businesses could beryllium wounded arsenic a result.

Brian Moynihan’s statements, citing information from U.S. Treasury reports, travel amid contention astir whether to let amendments to the precocious delayed crypto measure being debated by the Senate Banking Committee. The astir caller draught would prohibit idle stablecoins from bearing interest, similar a slope account.

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The draught legislation, released Monday, would prohibition firms from offering yields connected stablecoin deposits, unless they are granted owed to activities specified arsenic transactions, remittances, oregon rank successful loyalty programs.

On a caller quarterly net call, Moynihan compared the fiscal operation of stablecoins to that of a “money marketplace communal fund,” wherever deposited currency is invested successful low-risk, short-term indebtedness securities similar U.S. treasury bills. He argues this means involvement bearing stablecoins would truthful “take lending capableness out” of the accepted banking system.

Moynihan said BoA has told Congress astir its concerns regarding however this would interaction smaller companies. He highlighted however these smaller companies are mostly much apt to beryllium lent wealth via banks, arsenic opposed to ample companies, which rise wealth via superior markets, for example, via an IPO.

The CEO predicted that funds moving into stablecoins could yet summation the outgo of borrowing. Moynihan said banks are either “not going to beryllium capable to indebtedness oregon they're going to person to get wholesale funding,” adding that this would summation the wide outgo of borrowing. In this context, wholesale backing is wealth for loans not derived from lawsuit deposits, for example, from a Central Bank oregon superior markets.

Brian Armstrong, CEO of crypto speech Coinbase, has argued successful the other absorption of the bank, with his institution officially withdrawing enactment for the bill.

In a caller tweet, helium accused the Senate of drafting amendments that “would termination rewards connected stablecoins, allowing banks to prohibition their competition.”

Armstrong criticised galore different aspects of the bill, including restrictions connected tokenized equities, and elements which could summation authorities surveillance of crypto transfers. 

“Crypto needs to beryllium treated connected a level playing tract with the remainder of fiscal services truthful we tin physique this manufacture successful a harmless and trusted mode successful America,” said Armstrong.