The risk facing U.S. banks is not that stablecoins will suddenly siphon deposits through yield alone, but that deposits will gradually follow utility as financial experiences improve elsewhere. A battle is unfolding in Washington between bank lobbyists and crypto firms over stablecoins. One side argues that the GENIUS Act leaves a loophole that could allow stablecoins to pay yield and siphon deposits from banks, destabilizing the financial system; the other insists that the fear is exaggerated and anticompetitive. The fight feels existential.
The real competitive threat to U.S. banks is not stablecoin yield itself, but the steady rise of wallet apps and fintech platforms that are redefining where deposits sit by offering customers more useful and integrated financial products. Yield can attract deposits, but utility determines where deposits ultimately stay. By treating interest as the primary determinant of where deposits ultimately settle, banks are at best buying time by constraining one acquisition vector without addressing the forces that actually determine where customers keep their money. Even when standalone high-interest savings products succeed in attracting balances, they rarely become primary financial relationships.
They iterate quickly, bundle services seamlessly and meet customers where they already are. Stablecoins, when used at all, simply reduce friction in the background. They are infrastructure, not the value proposition. The same dynamic is now playing out in business banking.
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