The global stablecoin conversation has intensified as traditional banks confront a future where digital dollars increasingly compete with deposits. What began as a niche crypto experiment has evolved into a serious policy and market issue, with implications for lending, liquidity, and financial stability.
Recent public commentary has revealed how deep the divide has become between banks and crypto-native issuers. That divide came into focus through a pointed response from David Schwartz, Ex-Ripple’s Chief Technology Officer, during a discussion sparked by concerns raised within the U.S. banking sector. His remarks exposed the regulatory tension at the heart of the stablecoin debate.
Bank Executives Sound the Alarm on Deposits
The discussion gained momentum after CoinMarketCap highlighted comments from Bank of America CEO Brian Moynihan. He warned that interest-bearing stablecoins could draw as much as $6 trillion away from traditional bank deposits. Such an outflow, he argued, could increase funding costs for banks and limit credit availability for small businesses that rely heavily on bank loans.
Compete? On a level playing field? Are you mad!?
— David 'JoelKatz' Schwartz (@JoelKatz) January 16, 2026
Banks depend on deposits as a stable and low-cost funding base. When deposits shrink, banks must seek alternative funding sources, often at higher costs, which can ripple through the broader economy.
A Question About Banks Issuing Stablecoins
Reacting to these concerns, crypto commentator Digital Asset Investor questioned why banks could not issue their own stablecoins and compete directly in the yield-driven digital asset space. The comment reflected a widely held assumption that established financial institutions can easily adapt to technological disruption.
That assumption prompted a sharp rebuttal from David Schwartz, who rejected the idea that such competition could occur on fair terms.
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Schwartz Highlights Regulatory Imbalance
Banks operate under far stricter regulatory constraints than most stablecoin issuers. Capital requirements, liquidity rules, consumer protections, and continuous supervision limit how banks design and price financial products. In contrast, many stablecoin issuers face lighter oversight, allowing them to offer yields and features that banks cannot legally replicate.
This imbalance creates an uneven playing field. Banks cannot innovate freely without regulatory approval, while crypto-native firms can move faster and take risks that regulated institutions must avoid. Schwartz’s reaction underscored frustration with compliance becoming a structural disadvantage rather than a safeguard.
Why the Stablecoin Debate Matters
The exchange highlights a critical policy challenge. Stablecoins increasingly function like bank deposits but operate outside the same regulatory framework. As adoption grows, regulators must decide whether to extend bank-style rules to stablecoin issuers or create new categories that preserve competition without undermining financial stability.
Schwartz’s response captured the core issue. Without regulatory alignment, banks cannot simply “join the stablecoin party.” The resolution of this debate will shape the future of digital money, credit markets, and the role of blockchain in global finance.