Bank of America Warns of $6 Trillion Stablecoin Threat

Bank of America CEO Brian Moynihan warns of potential $6 trillion deposit shift to interest-bearing stablecoins, as stated in an earnings call referencing U.S. Treasury research.

The shift threatens bank deposits, reduces credit supply, especially for SMEs, and increases borrowing costs.

Stablecoins Could Redirect $6 Trillion from U.S. Banks

Bank of America’s Brian Moynihan has warned that interest-bearing stablecoins pose a threat, potentially siphoning $6 trillion in deposits from the U.S. banking system. The concern is grounded in research by the U.S. Treasury Department, which highlights that stablecoins function like money market mutual funds, holding reserves in cash or central bank assets rather than being used for lending facilities.

This shift could significantly shrink bank deposits, reducing credit supply, particularly affecting small and medium-sized enterprises (SMEs) reliant on bank loans. The shrinking deposits could drive up borrowing costs, impacting businesses that are more dependent on traditional banking infrastructure than tapping into capital markets.

Historical Context, Price Data, and Expert Insights

Did you know? None of the major cryptocurrencies, including Bitcoin, are explicitly listed as impacted by this potential shift, but stablecoins are suggested as an emerging force with the capacity to reshape traditional banking and impacting trillions in deposits.

The current data from CoinMarketCap shows Bitcoin’s price at $95,297.77 with a market cap of $1.90 trillion, reflecting a 4.59% rise over the past 7 days despite a 0.60% decline in the last 24 hours. Bitcoin holds a market dominance of 59.05%, indicating its continuing leading position within the crypto space. The trading volume has dipped by 18.35% in 24 hours, signaling a slowdown in buying or selling activity.

Insights from the Coincu research team suggest that regulatory outcomes surrounding stablecoins could significantly define banking and finance policies moving forward. This potential diversion of deposits could necessitate new financial models and regulations, as banks may have to adapt to hold competitive positions against these emerging financial products.