President Donald Trump's signing of the GENIUS Act marked a significant turning point: legalizing stablecoins in the U.S. This has traditional banks worried not because of the volatility of cryptocurrencies, but because of the stability of stablecoins.
The U.S. Treasury warns that if stablecoins are widely used, banks could lose over $6.6 trillion in deposits, especially as stablecoin platforms offer more attractive yields than bank interest rates.
For example, Coinbase is currently offering a 4.10% reward for USDC holders, a figure that has many financial institutions on edge.
Pressure For Oversight And Fairness
American banking associations are calling for tighter regulations related to stablecoins and demanding fair regulatory treatment between banks and stablecoin issuers.
One major concern is that stablecoins could access tools from the Federal Reserve without strict oversight.
If users transfer money from insured accounts to unprotected stablecoin funds, the financial system may face new liquidity and credit risks.
Traditional Banks And Big Tech: Competition Or Collaboration?
Under market pressure, many large banks are considering issuing stablecoins themselves to avoid being outpaced by tech companies.
Meanwhile, Mastercard has chosen a collaborative approach, viewing stablecoins as a tool to optimize global payments rather than a threat. Some experts comment:
“If banks do not change, they will be left behind in the race for financial innovation.”
In summary, stablecoins are shaking the traditional financial system, forcing parties to adapt quickly or be replaced.