Banks’ Stablecoin Concerns Are ‘unsubstantiated Myths‘: Professor (2026)
A Columbia Business School professor debunked five banking industry misunderstandings about stablecoin yields as the market structure bill heads for markups this month.
The US banking industry has been pushing “myths” about stablecoin yields to protect itself, and Congress should prioritize consumers rather than highly profitable banks, argues crypto lecturer and author Omid Malekan.
“I am disappointed that market structure legislation seems to be held up by the stablecoin yield issue. Most of the concerns bouncing around Washington are based on unsubstantiated myths,” Malekan, an adjunct professor at Columbia Business School, posted to X on Monday.
He stated that the passage of crypto market structure legislation in Washington “now seems to partially depend on the question of whether stablecoin issuers should be able to share their economics with third parties.”
The primary conflict is a “yield bottleneck” regarding who gets to profit from the interest on stablecoin reserves.
The banking lobbies have labeled this a “loophole” that they want closed. They fear that if users can passively earn around 5% risk-free yields on stablecoins, customers will withdraw billions from low-interest bank accounts in a “deposit flight,” destabilizing community banks, explained technologist Paul Barron on Saturday.
However, there are several counterarguments to these banking industry concerns, said Malekan.
The idea that stablecoin growth can only lead to shrinking bank deposits is false, he argued.
Stablecoins may actually increase bank deposits, since most stablecoin demand comes from abroad. As issuers must hold reserves in Treasury bills and bank deposits, this would create more banking activity overall.
Secondly, stablecoin competition won’t hurt lending, just bank profits, said Malekan. Banks can compete by paying higher interest rates to depositors. Currently, the national average savings account yield is a paltry 0.62%, according to BankRate.
Source: CoinTelegraph
