US banks declare war on stablecoins and ask Congress to ban digital dollar yields to protect deposits

Source: Yellow Original Title: US Banks Declare War on Stablecoins and Call on Congress to Ban Digital Dollar Yield to Protect Deposits

Original Link: The American Bankers Association is ramping up its lobbying campaign to curb the growth of stablecoins, arguing that digital dollar tokens pose a direct threat to bank deposits and local lending, according to a policy plan.

In its “Blueprint for Growth 2026,” the ABA urged Congress and federal regulators to prevent so-called “payment stablecoins” from functioning as deposit substitutes, explicitly calling on lawmakers to ban interest, yield, or rewards on stablecoins, regardless of the issuing platform.

The proposal represents one of the clearest efforts so far by the US banking lobby to slow the expansion of stablecoins as they gain traction in payments, trading, and cross-border settlement.

Banks Frame Stablecoins as a Risk to Credit

The ABA stated that allowing stablecoins to offer yields would drain deposits from traditional banks, particularly community lenders, reducing credit availability for households and small businesses.

The group warned that stablecoins paying yields could undermine the funding base that banks rely on to support local economies.

“Prevent payment stablecoins from becoming deposit substitutes,” the association notes in the blueprint, labeling yield-bearing tokens as a threat to community bank credit and financial stability.

The policy document, developed by the ABA’s Government Relations Council and approved by its board, will guide the group’s relationship with Congress and the Trump administration throughout 2026.

Regulatory Line Drawn Against Crypto Finance

The language on stablecoins is positioned alongside broader ABA priorities aimed at strengthening oversight of non-bank financial activity.

The association urged policymakers to restrict non-bank entities’ access to Federal Reserve infrastructure, arguing that fintech and crypto companies should not benefit from privileges similar to those of banks without being subject to the same standards of soundness and security as regulated lenders.

The blueprint also rejects what the ABA describes as regulatory distortions favoring non-banks, portraying stablecoins as part of a broader competitive imbalance between traditional banks and native crypto companies.

A founder of a crypto platform recently withdrew support for the US Senate bill on the crypto market structure in its current draft, a move that reveals growing fractures between lawmakers and the cryptocurrency industry over how digital assets should be regulated.