Stablecoin Yield Crackdown Becomes Priority for American Bankers Association

The American Bankers Association (ABA) has prioritized addressing stablecoin yield concerns for 2026, amid ongoing discussions with U.S. lawmakers about potential impacts on the banking industry's competitiveness. According to Cointelegraph, the ABA announced on Tuesday that one of its key objectives this year is to prevent payment stablecoins from becoming deposit substitutes that could reduce community bank lending by prohibiting interest, yield, or rewards across all platforms. Stablecoin oversight leads a list of five priorities, which also includes combating financial fraud, opposing arbitrary interest rate caps, and emphasizing indexing and mission-driven banks. ABA CEO and President Rob Nichols stated that these priorities are shaped by feedback from various banks and businesses of diverse sizes and models. The association's dispute with the crypto industry centers on whether yield-bearing stablecoins will divert deposits from traditional banks, potentially weakening lending and diminishing banks' roles in the financial system. Bank of America CEO Brian Moynihan recently argued that up to $6 trillion could shift from banks to interest-paying stablecoins. Despite the GENIUS Act, passed last year, which prohibited stablecoin issuers from offering interest or yield to holders, the ABA’s Community Bankers Council expressed concerns in a letter to lawmakers in early January about a loophole that might allow yield-bearing stablecoins to undermine traditional banks. The Community Bankers Council urged the Senate to incorporate provisions in market structure legislation to tighten stablecoin regulations, preventing issuers from offering yield through third parties. However, crypto executives believe that stablecoin yields could be beneficial rather than harmful. Circle CEO Jeremy Allaire dismissed fears of stablecoin yields causing bank runs as "totally absurd," emphasizing their role in enhancing customer retention and engagement. At the World Economic Forum in Davos, Allaire stated, "They help with stickiness, they help with customer traction." Meanwhile, Anthony Scaramucci, founder of asset manager SkyBridge Capital, argued that prohibiting yield-bearing stablecoins places the U.S. dollar at a competitive disadvantage compared to China's digital yuan, a yield-bearing central bank digital currency. The debate continues as both sides weigh the implications of stablecoin yields on the financial landscape.