As Congress debates crypto market structure legislation, one issue has emerged as especially contentious: whether stablecoins should be allowed to pay yield. On its face, this looks like a narrow question about one niche of the crypto economy. In reality, it goes to the heart of the U.S. financial system. The fight over yield-bearing stablecoins isn’t really about stablecoins.
It is about deposits, and about who gets paid on them. For decades, most consumer balances in the United States have earned little or nothing for their owners, but that doesn’t mean the money sat idle. Banks take deposits and put them to work: lending, investing, and earning returns. What consumers have received in exchange is safety, liquidity, and convenience (bank runs happen but are rare and are mitigated by the FDIC insurance regime).
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