WASHINGTON (dpa-AFX) - Bank of America CEO Brian Moynihan expressed concern that up to $6 trillion in deposits could leave the U.S. banking system in favor of stablecoins, which could account for around 30 to 35 percent of total commercial bank deposits.
During earnings call on Wednesday, he shared that this estimate, drawn from Treasury Department studies, underscores the risks associated with interest-bearing stablecoins.
He pointed out that stablecoins operate much like money market funds, where the reserves are kept in short-term assets, such as U.S. Treasurys, instead of being used for bank lending.
This change could reduce the deposit base that banks depend on for funding loans, pushing them to rely on pricier wholesale funding options.
Moynihan's remarks come as the Senate is discussing a crypto market structure bill that would prohibit interest payments on unused stablecoin balances, a measure that has met resistance from segments of the crypto industry and some lawmakers.
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