The $6 Trillion Warning
Bank of America CEO Brian Moynihan issued a blunt ultimatum to lawmakers during Wednesday’s Q4 earnings call: protect the banking model, or watch $6 trillion vanish. Moynihan cited Treasury Department data suggesting that 30-35% of U.S. commercial bank deposits could migrate to stablecoins if digital dollar issuers are permitted to offer yield.
The warning arrived with precision timing. Just hours later, Senate Banking Committee Chair Tim Scott postponed the markup of the “GENIUS Act” after Coinbase withdrew its support. The sticking point is identical to Moynihan’s fear: the bill’s prohibition on stablecoin rewards.
The Mechanic: Yield as a Weapon
Moynihan’s argument hinges on the structural advantage of stablecoins over traditional deposits. While commercial banks currently offer near-zero interest on checking accounts (using the spread to fund lending), stablecoin issuers holding short-term Treasuries could theoretically pass 3-5% yields directly to holders.
“If you take out deposits, they’re either not going to be able to loan or they’re going to have to get wholesale funding,” Moynihan noted, comparing the threat to money market funds that drain liquidity from the lending economy.
For the banking lobby, this is existential. A $6 trillion outflow would force institutions to rely on expensive wholesale funding, crushing net interest margins (NIM) and contracting credit availability for mortgages and small business loans.
Market Divergence
The legislative impasse triggered immediate repricing in equities. Bank of America (BAC) slid 3.8% to close at $52.50, weighed down by the murky outlook for deposit costs and a broader sector sell-off. In contrast, Bitcoin (BTC) shrugged off the regulatory delay, climbing 1.4% to reclaim the $97,000 level.
Coinbase (COIN), despite CEO Brian Armstrong’s public break with the Senate negotiation, dropped 2.1% in after-hours trading. Armstrong labeled the draft legislation “unworkable,” specifically targeting provisions that would ban “tokenized equities” and kill stablecoin yields, effectively preserving the banking sector’s monopoly on interest-bearing accounts.
The Standoff
The collapse of the Jan. 15 markup signals a hardening of battle lines. The banking lobby has successfully framed interest-bearing stablecoins as a systemic risk to credit creation, while the crypto sector refuses to accept a regulatory framework that strips digital assets of their primary utility, yield. With the Senate Banking Committee delaying the vote indefinitely, the “deposit flight” narrative has moved from theoretical risk to the central obstacle in Washington.
