Advertise
- Zafar Naik
Zafar Naik
- Reviewed by:
Qadir AKQadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.
- Jan 23, 2026 10:22 UTC
-
US Banks Seek Stablecoin Yield Ban Before 2026 Elections: What’s at Stake?
US banks are urging Congress to ban stablecoin yields, warning of massive deposit losses.
Crypto leaders are pushing back, arguing that banning yields could hurt US competitiveness.
The fight over stablecoin yields is already stalling legislation, putting crypto regulation on shaky ground.
The American Bankers Association wants Congress to eliminate stablecoin yields before the midterms.
The ABA released its 2026 policy priorities on Tuesday, placing stablecoin oversight at the top of the list. The group is pushing lawmakers to “stop payment stablecoins from becoming deposit substitutes” by banning interest, yield, or rewards on these tokens.
Congress is already working on crypto market structure legislation ahead of the November 2026 elections. Banks see this as the moment to act.
Banks Warn of $6 Trillion Deposit Flight
Bank of America CEO Brian Moynihan raised the alarm earlier this month. He argued that up to $6 trillion could leave traditional banks if stablecoin yields remain legal.
The ABA says community banks would take the hardest hit. Without deposits, these banks lose the ability to fund mortgages and small business loans. The lobby frames this as a financial stability issue, not an attack on innovation.
On January 14, more than 3,200 bankers signed a letter to the Senate demanding action. They want yield bans extended beyond stablecoin issuers to include crypto exchanges and affiliated platforms. The reason: a loophole in the GENIUS Act still allows yield payments through third parties.
Circle CEO Calls Concerns “Totally Absurd”
Crypto executives see things differently.
Circle CEO Jeremy Allaire pushed back on the bank run narrative at Davos. “They help with stickiness, they help with customer traction,” he said, defending stablecoin yields as a tool for adoption.
SkyBridge Capital founder Anthony Scaramucci warned that banning yields could backfire. He pointed out that China’s digital yuan already offers yield, putting the US dollar at a competitive disadvantage if American stablecoins cannot do the same.
What Happens Next
The stablecoin yield fight has already caused problems on Capitol Hill. Last week, the Senate Banking Committee postponed a key markup after Coinbase withdrew its support over the issue.
As lawmakers push toward a final vote, the outcome will determine whether digital dollars can compete with traditional bank deposits or remain locked inside bank-friendly rules.
Never Miss a Beat in the Crypto World!
Stay ahead with breaking news, expert analysis, and real-time updates on the latest trends in Bitcoin, altcoins, DeFi, NFTs, and more.
FAQs
Stablecoin yields are interest or rewards paid on digital tokens. Banks fear they could draw deposits away, threatening traditional lending.
Crypto firms say yields encourage adoption, improve customer retention, and keep U.S. digital dollars competitive globally.
A ban may limit adoption, reduce competitiveness against foreign digital currencies, and shift innovation toward bank-friendly rules.
Trust with CoinPedia:
CoinPedia has been delivering accurate and timely cryptocurrency and blockchain updates since 2017. All content is created by our expert panel of analysts and journalists, following strict Editorial Guidelines based on E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness). Every article is fact-checked against reputable sources to ensure accuracy, transparency, and reliability. Our review policy guarantees unbiased evaluations when recommending exchanges, platforms, or tools. We strive to provide timely updates about everything crypto & blockchain, right from startups to industry majors.
Investment Disclaimer:
All opinions and insights shared represent the author's own views on current market conditions. Please do your own research before making investment decisions. Neither the writer nor the publication assumes responsibility for your financial choices.
Sponsored and Advertisements:
Sponsored content and affiliate links may appear on our site. Advertisements are marked clearly, and our editorial content remains entirely independent from our ad partners.
Yes 
No 
