The debates surrounding interest accrual on stablecoins may alter the very understanding of consumer 'money' accounts amid tensions in the banking sector.
The confrontation over stablecoin regulation in Washington increasingly resembles a dispute over bank deposits. Banks immediately see this as a familiar problem. It is about who actually controls customer money.
Now the question is no longer whether tokens pegged to the dollar should exist. The dispute has shifted to another. Should they be considered equivalent to deposits, especially if holders can receive rewards similar to interest simply for holding such assets.
A recent meeting at the White House was supposed to help ease tensions between banks and crypto associations. However, no agreement was reached. The main contentious issue remains the accrual of yields and bonuses on stablecoins.
Context is also important. Stablecoins have long ceased to be a narrow tool for traders and settlements between exchanges.
According to DeFiLlama, the total volume of stablecoins in circulation reached a peak of $311.3 billion in mid-January.
At such scales, the discussion ceases to be theoretical. It is already a matter of where in the financial system the most stable and liquid 'cash' will be stored and who will benefit from these remnants.
Why banks perceive stablecoins as competitors to deposits
Banks are closely monitoring the stablecoin market because the current model effectively diverts 'deposit-like' money from bank balances into short-term U.S. Treasury bonds.
For banks, deposits are cheap funding. They underpin lending and largely hold the margin. Stablecoin reserves, on the other hand, are typically placed in cash and short-term Treasury securities. As a result, funds that previously remained in the banking system as deposits are moving into sovereign debt.
Essentially, the distribution of roles is changing. Who earns, who acts as an intermediary, and who controls the client base.
The political situation becomes sensitive when a product begins to compete on yield. If stablecoins do not yield interest, they appear as a payment tool. It is simply a faster and more convenient payment technology.
But if they start to yield income, directly or through platform bonuses perceived as interest, they begin to resemble a savings product.
This is where banks see a direct threat to their deposit business, especially regional players who heavily rely on retail deposits.
Standard Chartered recently attempted to assess the scale of the risk. The bank warned that by the end of 2028, stablecoins could withdraw about $500 billion in deposits from American banks. Regional banks will be the most affected.
The number itself is not even important, but the signal. This is how banks and regulators model the next stage of market development.
In this logic, the crypto platform becomes a kind of front office for storing 'cash', while banks fall to the background or lose part of their balances entirely.
GENIUS and CLARITY have intertwined in a dispute over yield.
A law on stablecoins has already been passed in the U.S., and it has become the center of the current conflict.
President Donald Trump signed the GENIUS Act in July 2025. The law was conceived as a way to include stablecoins in a regulated field while simultaneously supporting demand for U.S. government debt through reserve requirements.
However, its full implementation has been postponed. Finance Minister Scott Bessent confirmed that the law could only be launched by July of this year.
This pause became one of the reasons why the dispute over stablecoin yield shifted to a discussion of market structure within the CLARITY initiative.
Banks argue that even if stablecoin issuers are restricted, third parties, including exchanges, brokers, and fintech companies, will be able to offer bonuses that effectively look like interest. This could lead clients away from insured bank deposits.
Therefore, the banking side is proposing a strict ban on any form of yield. According to their position, no one should provide owners of payment stablecoins with financial or non-financial rewards related to the purchase, use, or storage of such tokens.
They also believe that any exceptions should be extremely limited to avoid triggering deposit outflows and weakening real sector lending.
Crypto companies, in turn, assert that bonuses and rewards are a necessary competitive tool. In their opinion, a ban would entrench banks' dominance and limit the ability of new players to compete for client balances.
Tensions have already slowed the legislative process.
Last month, Coinbase CEO Brian Armstrong stated that the company would not support the bill in its current form. Among the reasons, he cited restrictions on rewards for stablecoins. This helped delay consideration of the initiative in the Senate Banking Committee.
Nevertheless, there is no unified position within the crypto industry.
BitGo CEO Mike Belcher believes there is no point in returning to the discussion of GENIUS. In his view, this issue has already been resolved, and any changes should be made through amendments. He also urged not to stall CLARITY due to a separate dispute over yield, adding: "Get CLARITY done."
The split around these two directions is already affecting industry plans for 2026. At the same time, it defines how banks and crypto platforms are preparing for new rules that will decide who will control the main dollar balance of the consumer.
Three scenarios for the market and three different sets of winners
The current stalemate around stablecoins may resolve in different ways. Each option will change the balance of power in the crypto industry and the financial sector in its own way.
The first scenario: a strict ban on yield, beneficial to banks.
If Congress or regulators restrict passive rewards for simply holding tokens, stablecoins will ultimately shift towards transactions and payment infrastructure rather than savings.
In this case, traditional players will use them more actively, as they need new settlement rails without direct competition with deposits.
A signal may be the position of Visa. The company reported more than $3.5 billion in annual transactions in stablecoins as of November 30, 2025, and in December expanded transactions in USDC for American financial institutions.
In such a scenario, stablecoins grow due to convenience and speed, not due to yield for holders.
The second scenario: a compromise between banks and crypto companies.
Legislators may allow bonuses tied to activity, such as payments or transfers, but restrict traditional interest income for holding.
This will maintain incentives for users but will strengthen compliance and disclosure requirements. Larger platforms with scale and resources will have the advantage.
A side effect in this case is the transfer of yield into wrappers around stablecoins. Income may be generated through tokenized money market funds, sweep mechanisms, and other products that are formally separated from the balance of the payment stablecoin.
The third scenario: a prolonged status quo. If the dispute between banks and crypto companies drags on into 2026, bonuses will continue to exist long enough for the 'cash-account' model based on stablecoins to become commonplace.
In this case, the hypothesis of deposit outflow may be partially confirmed, especially if the yield difference remains significant for consumers.
However, such a scenario increases the risk of a harsher response from authorities in the future. A sharp policy reversal is possible, where rules change after the distribution of client balances shifts, and the issue of deposit outflow becomes politically sensitive.
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