I've noticed an escalating debate happening now in Washington about how to regulate stablecoins, especially those that pay interest on user balances. Damon, the CEO of one of the largest American banks, has begun to present a clear vision on this issue.

In a recent television interview, Damon emphasized an important point: if a company holds users' money and pays interest on it, that means it is functioning as a bank indeed. Therefore, it should be subject to the regulations that apply to traditional banks. Damon explicitly stated: rewards are the same as interest, and if you hold balances and pay interest, you are a bank and must be regulated.

This stance reflects increasing tension between the big banking sector and the crypto sector. A major crypto exchange platform and its CEO had supported a specific bill to regulate this sector but withdrew their support at the last minute before the vote. Damon sees this position as illogical.

What Damon and other banking representatives are demanding is real clarity: either crypto platforms offer rewards only related to transactions ( and not interest on balances ), or they accept the same regulatory standards that apply to banks. These standards include capital and liquidity requirements, anti-money laundering rules, and federal deposit insurance.

Damon describes this as a matter of fairness and financial system safety. He says banks bear a huge compliance burden—from anti-money laundering checks to community lending obligations—and this is designed to protect the entire system. Therefore, companies providing similar financial services should operate under similar oversight.

On the other hand, Damon affirms that the bank he works for already supports competition—so much so that they have developed their own digital currency and use blockchain technology in their operations. But Damon believes that competition should be fair and balanced.

The core issue Damon raises is clear: risks cannot accumulate outside the regulated system. If some entities offer banking services without the necessary oversight, it poses a threat to financial stability. Lawmakers in Washington are now evaluating how to balance the development of the crypto sector with the protection of the financial system—and Damon’s stance represents the perspective of major financial institutions in this debate.