When Stablecoins Become the Beast: Bank of America Warns Trillions of Dollars at Risk of Moving

What is the beast of the rise of stablecoins for the traditional banking industry? This question is not merely academic speculation but a real concern now on the agenda in the DPR building. Brian Moynihan, CEO of Bank of America, recently sounded the alarm about the potential impact of stablecoins on the broader financial system—a warning that reflects a high-stakes gamble behind this digital transition.

Bank of America CEO Identifies Systemic Risks Threatening the Industry

Although Moynihan admits that Bank of America will remain “fine” with stablecoin growth, he emphasizes that the banking system as a whole faces serious challenges. His main concern centers on scenarios where around $6 trillion in deposits shift from conventional banks to stablecoins and related crypto products offering yields.

This statement was made as Bank of America presented its Q4 2025 financial results, a symbolic moment given that the bank closed the year with $2 trillion in deposits. This figure illustrates how significant the potential losses could be if even a small portion of customer funds move to blockchain-based alternatives.

Impact Mechanism: From Empty Deposits to Rising Borrowing Costs

The meaning of the beast behind this deposit shift is not just about losing funds. Moynihan explains in detail the mechanics triggering a chain reaction within the banking system. When deposits flow out, the bank’s lending capacity shrinks significantly. Banks no longer have enough funds to support loans to households and small to medium-sized enterprises.

As a result, financial institutions are forced to rely on wholesale funding—much more expensive and unstable sources of capital. These costs will translate into higher loan interest rates, a burden likely to be borne first by the small and medium enterprise segments. This is the beast of digital financial transformation—appearing progressive but carrying hidden systemic risks.

THE GENIUS Act and the Regulatory Battle in Congress

Regulatory responses to this phenomenon are still under intense debate. The GENIUS Act, passed last year, is designed to establish a federal framework for stablecoin issuers. However, banks are proposing tighter safeguards—particularly to prevent stablecoins from functioning as substitutes for interest-bearing deposits.

The regulatory gap of concern is the ability of stablecoin issuers to offer yield-like incentives despite legal prohibitions against direct interest payments. The American Bankers Association (ABA), representing over 100 community financial institutions, recently urged the Senate to close this “dangerous loophole” through new legislation introduced in early January.

Gerard Cassidy, an analyst at RBC Capital Markets, questions whether US legislators will act before it’s too late. He emphasizes the importance of closing this loophole before stablecoin deposits effectively start paying interest—something that could forever alter the competitive landscape of the banking industry.

Divergent Views: JPMorgan Downplays the Threat, While the Banking Community Remains Vigilant

Not all major players in the banking industry agree with Moynihan and ABA’s risk assessments. JPMorgan, for example, when asked whether stablecoins pose systemic risks, downplayed the threat with a different argument.

A JPMorgan spokesperson stated that there are always various layers of money circulating—from central bank holdings to institutional and commercial money. They believe this will not change, and stablecoins and deposit tokens will only serve as complementary alternatives within the payment ecosystem, not as replacements that shift the system’s equilibrium.

This difference in views reflects strategic divisions among large financial institutions in responding to the increasingly mature crypto transformation. While community bankers raise alarms, multinational players like JPMorgan seem more confident in facing the disruption.

The Beast of Stablecoins: A Moment of Decision for the Global Financial Ecosystem

What is being played out in legislative forums today is not just a technical regulatory detail. It is a fundamental battle between the traditional banking model and the decentralized digital financial system. The beast of stablecoins is essentially a question of who will control the flow of money and how the global payment system will be structured in the future.

If $6 trillion truly migrates to stablecoins, it will not only drain deposits from conventional banks but also alter the power dynamics within the financial industry. Banks that have been the gatekeepers of the payment system for centuries will face new competitors whose operations are lighter, faster, and less regulated.

The legislative journey of the GENIUS Act and related amendments will determine how far this transformation can proceed or how tightly regulation will hold back stablecoin adoption momentum. The outcome of this battle will resonate not only on Wall Street but also in every home and small business that depends on a stable and affordable banking system.