Banks Sound the Alarm: ABA Claims Stablecoin Interest Could Trigger a 'Bank Run Lite'

The American Bankers Association (ABA) just fired off a warning letter to the White House's Council of Economic Advisors (CEA) with all the subtlety of someone yelling "fire" in a library full of depositors. Their objection to the CEA's stablecoin report reads like a concerned parent watching their teenager date someone with a suspiciously large coin collection.

The ABA isn't impressed with the CEA's homework. Their main grip: the report answered the wrong question entirely—spending its time asking what happens if interest payments on payment-based stablecoins get outlawed. Meanwhile, ABA wants to discuss the juicier scenario: what happens if interest-bearing stablecoins are allowed to run wild, like giving a caffeinated chihuahua access to the entire kibble supply.

Translation: banks are low-key terrified that stablecoin issuers offering yield will trigger a slow-motion bank run, except instead of panicked customers shoving through branch doors, they'll just watch their deposit base evaporate via a slick app interface. No getaway cars required.

The ABA points out that interest-offering stablecoins could accelerate deposit outflows, especially from small and local banks. This could jack up banks' funding costs and cramp their lending capacity. You know, normal banking stress stuff that happens when your customers find a better savings account that doesn't require a branch visit or a minimum balance that would make a whale blush.

Current stablecoin market cap sits around $300 billion, which ABA calls a "misleading reference point." Their concern is the future scale: if the market balloons to $1-2 trillion, that interest rate mechanism isn't just