Rich by Coin

Traditional banks may be more exposed to stablecoin regulatory uncertainty than crypto companies, according to Colin Butler, executive vice president of capital markets at Mega Matrix. Butler told Cointelegraph that financial institutions have already spent heavily on digital asset infrastructure. That spending cannot be fully deployed until regulators decide whether stablecoins qualify as deposits, securities, or a separate class of payment instrument. Several major banks have made meaningful commitments in this space, including JPMorgan with its Onyx blockchain payments network, BNY Mellon with a digital asset custody service, and Citigroup testing tokenized deposits internally.

“The infrastructure spend is real, but regulatory ambiguity caps how far those investments can scale,” Butler said. Risk and compliance teams at these institutions will not approve full deployment without a defined regulatory classification, Butler explained. Crypto firms, by contrast, have operated in unresolved regulatory environments for years and are accustomed to continuing under those conditions. Banks do not have the same operational flexibility.

Fabian Dori, chief investment officer at Swiss digital asset bank Sygnum, said the competitive gap between banks and crypto platforms is real but not yet at a critical level. He said a sudden large-scale shift of deposits from banks to stablecoin platforms is unlikely in the short term. Institutions still weigh trust, regulatory standing, and operational resilience when deciding where to hold liquidity. The yield difference between platforms is a growing pressure point.

Crypto exchanges commonly offer between 4% and 5% returns on stablecoin balances. The average U.S. savings account currently yields below 0.5%. Butler said the 1970s migration into money market funds offers a historical comparison, and argued that today’s equivalent shift could happen more quickly because moving funds from a bank to a stablecoin platform takes only minutes. Butler also warned about the unintended consequences of restricting stablecoin yield at the legislative level.

U.S. law currently bars stablecoin issuers from paying yield directly to holders, though exchanges can still provide returns through lending, staking, or promotional structures. Broader restrictions could redirect capital toward synthetic dollar products such as Ethena’s USDe, which generates yield through derivatives markets. That outcome would concentrate activity in less regulated offshore structures, Butler said, producing the opposite result of what legislators intend. “Capital doesn’t stop seeking returns,” he said.