Brian Moynihan, the CEO of Bank of America, has issued a significant warning regarding the potential impact of stablecoins on the United States banking system. During a January 15 earnings call, Moynihan projected that as much as $6 trillion in deposits could migrate from U.S. commercial banks into stablecoins. This figure represents approximately 30% to 35% of total U.S. commercial bank deposits.
Moynihan attributed this projection to studies conducted by the U.S. Treasury Department. The warning comes at a time of heightened tension between lawmakers, regulators, and financial institutions concerning how interest-bearing stablecoins might reshape the nation's banking landscape.
Moynihan: Stablecoins Resemble Money Market Funds
Brian Moynihan drew a comparison between the structure of stablecoins and money market mutual funds. He explained that stablecoin reserves are typically held in short-term instruments, such as U.S. Treasurys, rather than being recirculated into traditional lending activities.
“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, and that wholesale funding will come at a cost,” Moynihan stated.
The Bank of America chief cautioned that a substantial outflow of deposits could impair banks' capacity to issue credit to households and businesses, which is a fundamental aspect of U.S. economic activity.
Moynihan's remarks coincided with a renewed legislative focus on stablecoins. The latest iteration of the Senate's crypto market structure bill, introduced by Senate Banking Committee Chair Tim Scott on January 9, includes provisions that would prohibit digital asset service providers from offering interest or yield to users solely for holding stablecoins.
However, the draft legislation does permit "activity-based" rewards, such as incentives linked to staking, liquidity provision, or collateral posting. Over 70 amendments were reportedly submitted ahead of a scheduled committee markup this week, indicating significant lobbying efforts from both the crypto and banking sectors.
Beyond banking concerns, the bill has also attracted scrutiny from the crypto industry and privacy advocates. A report from Galaxy Research warned that the legislation could lead to "the single largest expansion to financial surveillance authorities since the USA PATRIOT Act," granting the Treasury Department extensive new powers over digital asset transactions.
Coinbase CEO Brian Armstrong announced on Wednesday that the exchange could no longer support the bill, asserting that it would "kill rewards on stablecoins." Later that day, Senator Scott postponed the markup session, stating, "Everyone remains at the table working in good faith."
Bank of America Expands Its Crypto Presence
Despite Brian Moynihan's cautionary stance on stablecoins, Bank of America, the world's second-largest bank by market capitalization, has been progressively increasing its engagement in the digital asset sector.
In February, Moynihan indicated that the bank was preparing to launch its own stablecoin once regulatory frameworks permit. More recently, new internal guidance reveals that the banking giant is now actively advising clients to consider cryptocurrency exposure.
In a recent note, Bank of America's wealth management division suggested that clients allocate between 1% and 4% of their portfolios to digital assets. This recommendation represents one of the bank's most direct endorsements of cryptocurrency to date and spans across Merrill, Bank of America Private Bank, and Merrill Edge platforms.
The firm's chief investment office also initiated coverage of four Bitcoin (BTC) exchange-traded funds (ETFs) on January 5. These include:
- •Bitwise Bitcoin ETF (BITB)
- •Fidelity Wise Origin Bitcoin Fund (FBTC)
- •Grayscale Bitcoin Mini Trust (BTC)
- •BlackRock iShares Bitcoin Trust (IBIT)
This development signifies a notable shift for the traditionally conservative bank, suggesting that Wall Street institutions are increasingly incorporating crypto products into mainstream investment offerings.
Community and Industry Push Back Against Moynihan's Remarks
Members of the cryptocurrency community have criticized Moynihan's warning, viewing it as an attempt to hinder innovation and limit consumer choice.
Appearing on CNBC shortly after withdrawing support from the CLARITY Act, Coinbase CEO Brian Armstrong stated:
"We can't really have banks come in and kill their competition at the expense of the American consumer. People in America should be able to earn more money on their money."
Armstrong added that stablecoins present an opportunity not only for crypto companies but also for banks and the government to develop products and foster a "level playing field" for everyone.
Crypto analyst Marty Bent commented:
“The banks don’t want consumers to get high-yield savings accounts. Crypto companies want to innovate, and Bitcoin developers and the right to self-custody are caught in the middle.”
Serial entrepreneur and Bitcoin advocate Gary Cardone responded:
“It is called competition, sir.”
Haider Rafique, Chief Marketing Officer at OKX, stated that Moynihan's remarks confirmed that stablecoins directly compete with bank deposits.
“As deposits move, banks lose cheap funding and lending capacity. People move because banks don’t offer fair yield — stablecoins do,” Rafique said. “Technology is exposing that gap, and customers are choosing accordingly.”
Crypto trader Dom Kwok echoed these sentiments, describing stablecoins as "the biggest existential threat to banks."