Bank of America warns major threat could push trillions out of U.S. banks

Core Viewpoint - Bank of America CEO Brian Moynihan warns that up to $6 trillion in deposits, approximately 30% to 35% of total U.S. commercial bank deposits, could shift to stablecoins, potentially disrupting the banking system [1][2][4]. Group 1: Stablecoin Impact on Banking - Moynihan's projection is based on studies from the U.S. Treasury Department, highlighting the ongoing tensions among lawmakers, regulators, and financial institutions regarding the implications of interest-bearing stablecoins [2]. - He compares stablecoins to money market mutual funds, noting that reserves are typically held in short-term instruments like U.S. Treasurys, which do not contribute to traditional lending [3]. - A significant outflow of deposits to stablecoins could hinder banks' ability to issue credit, which is essential for U.S. economic activity [4]. Group 2: Legislative Developments - The latest Senate crypto market structure bill includes provisions that would prohibit digital asset service providers from offering interest or yield on stablecoin holdings [5]. - The draft legislation allows for "activity-based" rewards, such as incentives related to staking or liquidity provision, amidst intense lobbying from both the crypto and banking sectors [6]. - Concerns have been raised about the bill potentially expanding financial surveillance powers, with a report from Galaxy Research indicating it could grant the Treasury Department extensive authority over digital asset transactions [6][7].