Banks Are Losing It Over Stablecoins 😱

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So, apparently, the big brains over at the Bank Policy Institute – a name that sounds impressively boring, doesn’t it? – have discovered a “loophole.” A loophole. As if the entire financial system isn’t already one giant, elaborately constructed loophole. They’ve written a strongly worded letter, mind you, to Congress, practically whimpering about how stablecoins might pay interest. The horror!

Their argument, as I understand it (and honestly, sometimes I don’t), is that if stablecoins start offering a decent return, everyone will pull their money out of actual banks. Six point six *trillion* dollars, they say. Which, statistically speaking, is a lot of money. Like, enough to buy a small country or several very nice yachts. They’re picturing a desolate landscape of empty bank lobbies and weeping tellers, I presume. 😭

The GENIUS Act, bless its heart, tried to prevent stablecoins from offering interest, but these clever crypto folks (devils, my accountant calls them) might be finding ways around it through affiliated exchanges. It’s like playing Whac-A-Mole with financial regulations. Except the moles are digital and occasionally worth more than my car.


You see, offering a little “yield” is how stablecoins lure people in. It’s the financial equivalent of putting sprinkles on a cupcake. Nobody wants a plain cupcake. Circle’s USDC, for example, showers you with rewards if you hold it on Coinbase or Kraken. This is practically bribery, if you ask me. Though, admittedly, my understanding of bribery is mostly from watching old movies. 🍿

The bankers seem genuinely terrified that people might choose an option that doesn’t involve exorbitant fees and confusing terms and conditions. It’s a troubling thought. They rely on us being too lazy to shop around. It’s a beautifully cynical system, really.

Stablecoins could undermine credit system, bankers say

The letter was co-signed by what feels like every banking association in America. It’s a real Who’s Who of people who would prefer you didn’t mess with their perfectly good, slightly predatory, system. They pointed out, very astutely, that stablecoins don’t “invest in securities” like regular banks do. This is true. They just… exist. Which is, frankly, a little unsettling.

“These distinctions are why payment stablecoins should not pay interest the way highly regulated and supervised banks do on deposits or offer yield as money market funds do.”

Translation: “Please don’t let people have options. We’ve worked very hard to corner the market on slightly-above-inflation interest rates.”

That $6.6 trillion exodus? According to a US Treasury report they conveniently cited. Which means someone, somewhere, already thought this was a plausible scenario. The bureaucracy is truly working overtime.

Naturally, this could all “pose a serious risk to America’s credit system.” As if the credit system isn’t already a house of cards built on late fees and variable interest rates. 🙄

“The result will be greater deposit flight risk, especially in times of stress, that will undermine credit creation throughout the economy. The corresponding reduction in credit supply means higher interest rates, fewer loans, and increased costs for Main Street businesses and households.”

Stablecoin market still a fraction of US money supply

Okay, deep breaths. The stablecoin market is currently $280.2 billion. The US money supply is a cool $22 trillion. So, you know, a tiny blip. A mosquito bite on an elephant. But still… the potential! 😈

Tether (USDT) and USDC are the big players, controlling over 80% of the market. Which means a handful of companies are currently deciding the fate of potentially trillions of dollars. What could possibly go wrong?

And, just for kicks, Trump signed the GENIUS Act into law, which apparently aims to strengthen the dollar’s dominance. Because nothing says “world superpower” like aggressively policing digital currencies. The Treasury expects the stablecoin market to balloon to $2 trillion by 2028. So, you know, buckle up. It’s going to be a ride. 🎢

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2025-08-13 08:03