U.S. banking industry opposes stablecoin transparency bill, warns it could impact deposits

CryptoWorld News reports that major U.S. banking groups oppose a bill on transparency for stablecoin yields, warning that stablecoin earnings could drain deposits and weaken the lending capacity of the financial system. The American Bankers Association and the Bank Policy Institute jointly stated that the current draft fails to adequately protect traditional deposits and could reshape the flow of funds. The banking groups believe that without regulation, yield-bearing stablecoins will attract large amounts of funds out of traditional accounts, with research showing this could lead to trillions of dollars flowing out of the banking system. Economist Andrew Nigrinis warned that this shift could reduce support for consumers, small businesses, and agriculture loans. Although White House economists believe that restricting stablecoin yields would only slightly increase bank lending, banking institutions pointed out that Section 404 of the bill could create regulatory loopholes, allowing crypto platforms to offer similar interest incentives. The groups plan to submit proposals to strengthen legislation, and the controversy has slowed the bill’s progress, raising concerns that it may not pass before the November 2026 midterm elections.