Original:《Dispelling the Biggest Myths on How Stablecoins Could Impact Banking and Credit》
Compiled by: Ken, Chaincatcher
The process of passing crypto market structure legislation in Washington currently seems to depend partly on this question: Should stablecoin issuers be allowed to share their economic returns with third parties?
The banking industry calls this a "stablecoin loophole," but Congress's intent regarding yields in the Clarity Act is very clear. Furthermore, it seems quite strange to call a practice that benefits ordinary Americans and gives them real returns a "loophole."
That said, this debate has been largely derailed by some unfounded fears, mainly about what broader stablecoin adoption could mean for banking and credit. Here are the five biggest myths and why they are wrong.
Myth 1: Stablecoin growth will only lead to a shrinkage in bank deposits
Wrong. They are not always substitutes, and stablecoin growth could actually increase deposits at U.S. banks.
So far, stablecoins have actually increased domestic bank deposits. We know this because:
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Most of the demand comes from overseas, likely from people who cannot access dollars through other means.
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All major issuers back their tokens with a combination of Treasury securities and bank deposits (the Clarity Act would further enforce this).
Combining these two factors, a scenario emerges where every additional dollar of stablecoin issuance drives an increase in bank deposits.
<极span style="font-size: inherit; font-family: PingFang SC,Helvetica Neue,Helvetica,Arial,Hiragino Sans GB,Heiti SC,Microsoft YaHei,WenQuanYi Micro Hei,sans-serif;">Even the portion of the issuer's reserves consisting of Treasury securities increases bank deposits. Trading government securities requires significant banking support, including buying and selling, repurchase agreements, foreign exchange transactions, and more. More stablecoins mean more securities trading related to stablecoins, which in turn leads to more bank deposits.
This should not surprise anyone. Stablecoins will promote the broader adoption of the U.S. dollar, which is a key reason the Clarity Act initially received bipartisan support. More dollars held overseas mean more deposits in U.S. banks. If stablecoin holders can earn yield rewards, demand will be higher, leading to even more deposits.
Skeptics might argue that this logic only holds if stablecoins are not adopted in the domestic market. But this view is short-sighted because stablecoins are global. Increased domestic demand means enhanced liquidity, higher awareness, accelerated innovation, and broader application overseas.
In summary: Stablecoins increase global demand for the U.S. dollar, especially yield-bearing ones. For the foreseeable future, this is likely to lead to an increase in bank deposits.
Myth 2: Domestic stablecoin adoption will harm the banking industry's ability to provide credit
Wrong. Deposit competition does not harm bank lending; it harms bank profitability. These are two very different issues.
The U.S. banking industry is extremely profitable—more so today than at almost any time in recent memory. Bank stocks were one of the best-performing sectors last year. Net interest margins (the difference between the interest banks pay depositors and the interest they charge borrowers) are at historically high levels and rising.
All banks need to do to compete for deposits—not just from stablecoins, but from anything—is to pay depositors slightly higher interest. This is what every other industry routinely does. Doing so might affect bank profits, but it does not necessarily affect credit availability or borrowing costs.
According to an analysis by the Financial Times, the banking industry pocketed an additional $1 trillion in net interest profits during the recent two-year rate-hiking cycle. JPMorgan Chase alone likely made $100 billion last year. That is more than enough firepower to compete with any third-party rewards paid to consumers by stablecoins.
Furthermore, U.S. banks currently hold nearly $3 trillion in reserves at the Federal Reserve, near record highs and far exceeding capital adequacy requirements. These idle funds sit there, earning hefty risk-free returns for the banks. If deposits flow out due to stablecoins, banks could easily use these funds to offset the loss, thereby maintaining the same level of credit supply. As banking regulations continue to be relaxed, banks' need for these reserves will decrease further in the coming years.
I don't know about you, but I don't think Congress should pass laws to protect bank shareholders and executives, especially when their stock prices are at all-time highs.
In summary: Banks can compete with stablecoins by paying customers higher interest. They can also offset deposit outflows by reducing their reserves at the Fed. Both actions might reduce their profitability but do not necessarily affect lending.
Myth 3: Banks are the most important source of credit in the U.S. and must be protected from competition
Wrong: Banks provide only about 20% of the total credit to U.S. businesses and households. A reduction in bank deposits is unlikely to lead to a proportional reduction in credit.
There are many nuances here, but on one point the data is clear: U.S. banks do not provide most of the credit most critical to ordinary people, such as mortgages. About half of small business loans also come from non-banks.
Why does this matter? Because even if stablecoins do harm bank deposits—which is not a given—and even if banks cannot simply raise savings interest rates—which they clearly can—this does not mean that adopting stablecoins will lead to higher borrowing costs.
Bank loans, especially those funded by deposits, are not that important. The U.S. is fortunate to have robust capital markets and large non-bank lenders. Examples include: money market funds, mortgage-backed securities, private credit funds, and insurance companies.
All these lenders—worth reiterating, they make up the majority of the lending market—could benefit from the wider application of stablecoins, including those offering rewards. This is because:
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They can all benefit from cutting-edge innovation in payments. By using stablecoins instead of slow and expensive wire transfers, the costs they save could make their credit supply more efficient and cheaper.
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Their lending rates are mostly benchmarked to Treasury bill rates. The more demand stablecoins create for U.S. government debt, the lower the cost of non-bank credit could be.
Widespread stablecoin adoption would likely lower the U.S. government's borrowing costs. That alone is reason enough to embrace them: stablecoins save money for taxpayers. Beyond that, most of the credit created in the U.S. is actually pegged to Treasury rates. This could lead to a scenario where stablecoins reduce bank deposits but also lower average borrowing costs.
In summary: Banks do not need special protection because they are not as important as they once were. In some scenarios, money flowing from banks to stablecoins could make mortgages and small business loans cheaper.
Myth 4: Community banks and regional banks are particularly vulnerable to stablecoins
Wrong. The真正 vulnerable ones are the large "money center" banks.
A digital dollar invented to improve the payment system competes more with large global payment banks that serve超大 clients than with small community banks that lend to farmers.
The view that the opposite is true does not stand up to basic common sense.
First, small banks typically already pay higher interest to depositors. Academic literature consistently explains that this is a natural result of large banks providing certain specific services (like correspondent banking) with less competition. Less competition means lower yields.
Stablecoins are first and foremost payment tools, so they are more likely to compete with wire transfer businesses than with basic savings accounts.
Second, survey data shows that community banks have an older customer base. This is intuitively reasonable: younger depositors are more inclined to use fintech apps or care more about the latest technology products typically supported by large banks.
Do we really think a middle-aged farmer in the Midwest who got his first mortgage through a local bank would abandon that bank for cryptocurrency offered by a startup?
The only reason this myth persists is that it is pushed by an unholy alliance of large banks trying to protect their profits and crypto startups trying to sell services to small banks.
In summary: It is not clear which type of financial institution is most affected by stablecoin adoption, but common sense tells us that those "too big to fail" large banks are more likely to have to compete with this new payment tool.
Myth 5: Borrowers matter, savers do not
Wrong: Both groups are essential for a viable banking system and even a strong economy.
Prohibiting stablecoin issuers from sharing their economic returns is effectively a hidden policy of "subsidizing borrowers at the expense of American savers." This is a strange policy choice. Saving is the other side of borrowing. It is also something that benefits everyone. Savings bring economic prosperity and help families weather economic downturns.
The so-called "loophole" that the banking lobby constantly protests actually just gives retirees like my mother, who live on their savings, an additional opportunity to increase their income. She is unlikely to switch to stablecoins, but why deprive her of the option?
Innovation and competition drive businesses to strive to provide better products and services for consumers; this is the cornerstone of the vitality of the U.S. economy. Why should the highly profitable banking industry be an exception?
When you consider that most of the interest that stablecoin issuers could theoretically pay actually comes from taxpayers (through the government bonds held by the issuers), their claim that "savers are irrelevant in this debate" becomes even more outrageous.
Why would Congress consider making a rule that insists taxpayers' money can only flow to bank shareholders and not to savers? I am sure this is not the intention of our officials, but the various fears spread by the banking lobby have confused this issue.
In summary: The stablecoin yield issue affects many people. What is bad for borrowers may be good for savers, and lending is inherently a two-sided market.
Conclusion
It would be very strange if Apple lobbied Congress to ban the production of better smartphones instead of working to improve existing models. It would be equally strange if Ford and General Motors lobbied Congress to ban Tesla instead of making popular electric vehicles. It would be wrong if I lobbied my department chair to not offer any new courses just to avoid improving my own.
Digital currency is no exception. The vast majority of concerns raised by the banking industry are unproven and lack basis. So far, Congress has done an excellent job of prioritizing American progress over corporate interests; it should not stop now.
The crypto industry urgently needs better regulation to go mainstream, and the Clarity Act has addressed the issue of stablecoins. It is time to focus on more important things. Whatever the outcome, the U.S. banking industry will be fine.
