Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
With Coinbase's temporary "betrayal" and the Senate Banking Committee's delayed review, the cryptocurrency market structure bill (CLARITY) has once again fallen into a phase of stagnation.
- Odaily Note: For background, see "The Biggest Variable in the Post-Crypto Market: Can the CLARITY Bill Pass the Senate?" and "CLARITY Review Suddenly Delayed: Why Is the Industry So Divided?".
Based on current market debates, the biggest point of contention surrounding CLARITY has focused on "yield-bearing stablecoins." Specifically, the GENIUS bill passed last year, in order to gain banking industry support, explicitly prohibited yield-bearing stablecoins. However, the bill only stipulated that stablecoin issuers cannot pay holders "any form of interest or yield," but did not restrict third parties from providing yields or rewards. The banking industry is very dissatisfied with this "workaround" and is trying to overturn it in CLARITY, banning all types of yield-bearing paths. This has drawn strong opposition from some cryptocurrency groups, represented by Coinbase.
Why are banks so opposed to yield-bearing stablecoins, insisting on blocking all yield paths? The goal of this article is to answer this question in detail by dissecting the profit model of large U.S. commercial banks.
Bank Deposit Outflows? Pure Nonsense
In statements opposing yield-bearing stablecoins, the most common reason used by banking representatives is "concern that stablecoins will cause bank deposit outflows" — Bank of America CEO Brian Moynihan said in a call last Wednesday: "Up to $6 trillion in deposits (about 30% to 35% of all U.S. commercial bank deposits) could migrate to stablecoins, thereby restricting banks' ability to lend to the overall U.S. economy... and yield-bearing stablecoins could accelerate deposit outflows."
However, anyone with a basic understanding of how stablecoins operate can see that this statement is highly misleading. When $1 flows into a stablecoin system like USDC, that $1 does not disappear into thin air. Instead, it is placed in the reserve treasury of stablecoin issuers like Circle and eventually flows back into the banking system in the form of cash deposits or other short-term liquid assets (such as Treasury bonds).
- Odaily Note: Stablecoins backed by crypto assets, futures hedging, algorithms, or other mechanisms are not considered here. First, because such stablecoins account for a small proportion; second, because these stablecoins do not fall under the discussion scenario for compliant stablecoins under the U.S. regulatory system — last year's GENIUS bill clearly defined reserve requirements for compliant stablecoins, limiting reserve assets to cash, short-term Treasury bonds, or central bank deposits, which must be segregated from operational funds.
So the reality is clear: Stablecoins do not cause bank deposit outflows because the funds always eventually flow back to banks and can be used for credit intermediation. This is determined by the business model of stablecoins and has little to do with whether they yield interest or not.
The real key issue lies in the change in deposit structure after the funds flow back.
The Cash Cow of American Big Banks
Before analyzing this change, we need to briefly introduce the interest-earning practices of large U.S. banks.
Van Buren Capital General Partner Scott Johnsson cited a paper from the University of California, Los Angeles, stating that since the 2008 financial crisis damaged the banking industry's credibility, commercial banks in the U.S. have diverged into two distinct forms in the deposit-taking business — high-interest banks and low-interest banks.
High-interest banks and low-interest banks are not formal classifications in a regulatory sense but are commonly used terms in market context — manifested in the fact that the deposit interest spread between high-interest banks and low-interest banks has reached more than 350 basis points (3.5%).
Why is there such a significant interest spread for the same deposit? The reason is that high-interest banks are mostly digital banks or banks with business structures focused on wealth management and capital market businesses (such as Capital One). They rely on high interest rates to attract deposits to support their credit or investment businesses. Conversely, low-interest banks are mainly national large commercial banks that actually hold the power in the banking industry, such as Bank of America, Chase Bank, and Wells Fargo. They have a vast retail customer base and payment networks, allowing them to maintain extremely low deposit costs through customer stickiness, brand effect, and branch convenience, without needing to compete for deposits with high interest rates.
From the perspective of deposit structure, high-interest banks generally focus on non-transaction deposits, i.e., deposits主要用于储蓄或获取利息回报 — such funds are more sensitive to interest rates and are more costly for banks; low-interest banks generally focus on transaction deposits, i.e., deposits主要用于支付、转账、结算 — the characteristics of such funds are high stickiness, frequent流动性, and extremely low interest rates, making them the most valuable liabilities for banks.
Latest data from the Federal Deposit Insurance Corporation (FDIC) shows that as of mid-December 2025, the average annual interest rate for U.S. savings accounts was only 0.39%.
Note, this is data that already includes the impact of high-interest banks. Since mainstream U.S. banks mostly follow the low-interest model, the actual interest they pay to depositors is far lower than this level — Galaxy founder and CEO Mike Novogratz直言 stated in an interview with CNBC that large banks pay almost zero interest to depositors (about 1 - 11 basis points), while the同期 Federal Reserve benchmark rate was between 3.50% and 3.75%. This spread brings huge profits to banks.
Coinbase Chief Compliance Officer Faryar Shirzad calculated a clearer account — U.S. banks can profit $176 billion annually from approximately $3 trillion in funds deposited at the Federal Reserve, and additionally profit $187 billion annually from transaction fees charged to depositors. Just from deposit spreads and payment transaction环节, this brings in over $360 billion in revenue annually.
The Real Change: Deposit Structure and Profit Distribution
Back to the topic, what changes will the stablecoin system bring to the bank deposit structure? How will yield-bearing stablecoins further助推 this trend? The logic is actually quite simple. What are the use cases for stablecoins? The answers are无非 payment, transfer, settlement... etc. Doesn't this sound familiar!
As mentioned earlier, these functions are the core utilities of transaction deposits, which are both the main type of deposits for large banks and the most valuable liabilities for banks. Therefore, the banking industry's real concern about stablecoins is — stablecoins, as a new transaction medium, can directly compete with transaction deposits in terms of use cases.
If stablecoins did not have yield-bearing functionality, it might be acceptable. Considering the usage barriers and the slight interest advantage of bank deposits (a mosquito's leg is still meat), the actual threat stablecoins pose to this core territory of large banks is not significant. But once stablecoins are given the feasibility of yielding interest, driven by the interest spread, more and more funds may shift from transaction deposits to stablecoins. Although these funds will eventually flow back into the banking system, stablecoin issuers, out of profit consideration, will inevitably invest most of the reserve funds into non-transaction deposits, only needing to retain a certain proportion of cash reserves to handle daily redemptions. This is the so-called change in deposit structure — the money remains in the banking system, but bank costs will increase significantly (the interest spread is compressed), and revenue from transaction fees will also decrease significantly.
At this point, the essence of the problem is very clear. The reason why the banking industry is fiercely opposed to yield-bearing stablecoins has never been about "whether the total amount of deposits within the banking system will decrease," but rather about the possible change in deposit structure and the resulting profit redistribution issue.
In the era without stablecoins, especially without yield-bearing stablecoins, large U.S. commercial banks firmly controlled this source of "zero-cost or even negative-cost" funds known as transaction deposits. They could earn risk-free profits through the spread between deposit rates and benchmark rates, and also continuously charge fees for basic financial services such as payment, settlement, and clearing, thus building an extremely solid closed loop that几乎不需要与储户分享收益.
The emergence of stablecoins essentially dismantles this closed loop. On the one hand, stablecoins highly compete with transaction deposits in terms of functionality, covering core scenarios such as payment, transfer, and settlement; on the other hand, yield-bearing stablecoins further introduce the variable of yield, making transaction funds that were originally not sensitive to interest rates begin to have the possibility of repricing.
In this process, funds do not leave the banking system, but banks may lose control over the profits from these funds — liabilities that were almost zero-cost are forced to transform into liabilities that require paying market-based yields; payment fees that were exclusively enjoyed by banks are also开始被分流 to stablecoin issuers, wallets, and protocol layers.
This is the change that the banking industry truly cannot accept. Understanding this, it is not difficult to understand why yield-bearing stablecoins have become the most intense and最难妥协的争议焦点 in the CLARITY legislative process.
