Bank of America CEO Brian Moynihan warned that up to $6 trillion in deposits, representing roughly 30% to 35% of all U.S. commercial bank deposits, could migrate from the traditional banking system into stablecoins if Congress permits interest payments on the digital tokens under pending legislation.
What Happened: Banking Chief Flags Deposit Flight Risk
Moynihan addressed investors during the company's fourth-quarter earnings call on Wednesday, citing Treasury Department studies to support his projection that a substantial portion of bank deposits could shift to stablecoins if the tokens are allowed to pay interest.
The banking sector has criticized the GENIUS Act, the landmark U.S. stablecoin legislation, for months.
The framework prohibits interest payments on payment-purpose stablecoins but applies only to issuers, a distinction critics say creates regulatory gaps.
Multiple banking associations sent a joint letter to the Senate Banking Committee urging Congress to extend the prohibition to digital asset exchanges, brokers, dealers, and related entities.
Moynihan compared stablecoins to money market mutual funds, which hold reserves in short-term instruments like U.S. Treasuries.
"If you move it outside the system, you'll reduce the lending capacity of banks," he said during the call, adding that institutions would face higher wholesale funding costs that would ultimately increase borrowing rates for consumers.
Bank of America itself would weather the shift, Moynihan said. Small- and medium-sized businesses would bear the heaviest burden since they rely primarily on bank lending.
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Why It Matters: Industry Opposition Mounting
The warning arrived as the Senate struggles with a broader market structure bill that has drawn sharp criticism from crypto industry leaders.
Coinbase CEO Brian Armstrong said the company could not support the current draft, pointing that "this version would be materially worse than the current status quo."
Among his concerns: a de facto ban on tokenized equities, restrictions on decentralized finance, erosion of the Commodity Futures Trading Commission's authority, and policies that would prohibit interest payments to passive stablecoin holders.
"We'd rather have no bill than a bad bill," Armstrong wrote.
The draft would allow stablecoin issuers to offer rewards for specific actions like account openings and cashback but bars interest payments to passive token holders. Armstrong argued this "would kill rewards on stablecoins" and allow banks to "ban their competition."
Senate Banking Committee Chairman Tim Scott announced Wednesday that the bill's markup had been postponed. No new markup date has been announced.
White House crypto and AI czar David Sacks weighed in, saying passage "remains as close as it's ever been" and urging the industry to use the pause to resolve differences.
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