The Loophole Turning Stablecoins Into a Trillion-Dollar Fight

WIRED

In April, the Treasury Department released a report suggesting consumers may move as much as $6.6 trillion out of bank deposits and into stablecoins, partially as a result of the GENIUS Act. If that happens, it could reduce the funds banks have available to lend, and consumers and businesses may face higher borrowing costs in the long run, according to research by the American Bankers Association, a prominent industry group.

Crypto advocates see things differently. They claim stablecoin rewards create healthy market pressure and could drive big banks to provide more competitive interest rates in an effort to keep customer deposits.

“To call this a trillion-dollar fight would be an understatement: This is highly fraught territory that banks have jealously guarded,” says former Republican representative Patrick McHenry of North Carolina, who served as chair of the House Financial Services Committee until January 2025.

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