Banks Sound Alarm: Stablecoins Paying Actual Interest Is 'Dangerous' — Apparently Free Money Is Bad for Bankers

The American Bankers Association has fired another broadside at the cryptocurrency industry's bow, this time training their sights on a White House stablecoin regulation report. In what has become a familiar ritual for anyone following crypto policy, the banking lobby has once again demonstrated that nothing strikes fear into traditional finance quite like the possibility of customers actually getting decent returns on their savings. The ABA has apparently decided that the real threat to the American financial system isn't economic instability, fraud, or inflation — it's a digital dollar that pays interest.

The banking industry's chief lobbying arm took issue with a study from the Council of Economic Advisors, arguing that regulators were asking the wrong question entirely. Instead of debating whether to ban interest payments on payment-based stablecoins — because apparently that's the urgent problem keeping bank executives up at night — the ABA insists that Washington should be losing sleep over what happens if stablecoins start actually delivering yields. One can practically hear the collective gasp from boardrooms across Manhattan as executives contemplate the horrifying scenario of customers having options.

According to the ABA's alarmist analysis, stablecoins that bear interest could trigger a deposit exodus from community and regional banks, ramping up their cost of funds while simultaneously gutting their ability to lend. The statement was careful to note that the current $300 billion stablecoin market shouldn't