Banking Lobby Warns Stablecoin Law Could Trigger Deposit Flight
A coalition of U.S. banking associations, including the American Bankers Association and the Bank Policy Institute, has raised alarms over the country’s new stablecoin law.
The groups argue that banning stablecoin issuers from paying interest, while allowing banks to continue offering it, creates an uneven playing field. According to their joint analysis, consumers could shift as much as $6.6 trillion in deposits into crypto platforms if the rules are left unchanged. That scale of outflow, they warn, would weaken banks’ ability to fund loans and could increase borrowing costs across the economy.
The trade groups are pressing lawmakers for amendments, specifically calling for a prohibition on all interest-bearing stablecoins to maintain regulatory parity between banks and crypto issuers.
EU Counters With Digital Euro Acceleration
In contrast, European policymakers are moving forward aggressively. The European Central Bank is accelerating development of a digital euro, with growing momentum to deploy it on public blockchains such as Ethereum or Solana.
This marks a major shift from earlier proposals that relied on private infrastructure. Supporters argue that public blockchains would give the digital euro greater transparency, interoperability, and resilience. Officials in Germany, France, and Greece have already expressed strong backing for a faster rollout, citing concerns that U.S. stablecoin dominance could weaken the euro’s role in international trade and finance.
The Global Stakes
For the United States, the stablecoin debate is about protecting the banking system. Traditional banks depend on deposits to support lending, and a rapid migration to crypto platforms could destabilize the sector.
In Europe, the challenge is geopolitical. By advancing the digital euro, the EU is seeking to reinforce its monetary sovereignty and ensure the euro retains relevance in the digital economy.
Beyond the transatlantic divide, Asia is also shaping the conversation. China has already piloted its digital yuan, which is being tested in cross-border trade and integrated into regional payment systems. Its progress underscores that digital currencies are not just about technology but about influence in global finance.
What to Expect Next
- United States: Bank lobbying efforts will intensify, with pressure on Congress to revise the law to prevent large-scale deposit flight.
- Europe: The ECB is expected to open consultations later this year on blockchain implementation for the digital euro.
- Global: The digital currency race may fragment along regional lines, with the U.S. prioritizing private stablecoins, the EU advancing a central bank–issued euro, and China expanding the reach of its digital yuan.
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