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Brian Moynihan made a grim warning about stablecoins.
During a Jan. 15 earnings call, the Bank of America CEO told analysts that as much as $6 trillion in deposits could migrate from the United States banking system into stablecoins, roughly 30% to 35% of total U.S. commercial bank deposits.
Moynihan attributed the projection to U.S. Treasury Department studies. It comes at a time when tensions between lawmakers, regulators, and financial institutions over how interest-bearing stablecoins could reshape the country’s banking landscape.
Related: Wall Street wins payments battle on Capitol Hill
Moynihan likened stablecoin structures to money market mutual funds, explaining that reserves are typically held in short-term instruments such as U.S. Treasurys rather than recycled into traditional lending.
“If you take out deposits, they’re either not going to be able to loan or they’re going to have to get wholesale funding, and that wholesale funding will come at a cost,” Moynihan said.
The Bank of America chief warned that a massive deposit exodus could undermine banks’ ability to issue credit to households and businesses, a cornerstone of U.S. economic activity.
Moynihan’s remarks coincided with renewed legislative focus on stablecoins.
The latest version of the Senate crypto market structure bill, released by Senate Banking Committee Chair Tim Scott on Jan. 9, includes provisions banning digital asset service providers from paying interest or yield to users for simply holding stablecoins.
However, the draft legislation allows “activity-based” rewards, such as incentives linked to staking, liquidity provision, or collateral posting.
Over 70 amendments were reportedly filed ahead of a planned committee markup this week, reflecting intense lobbying from both crypto and banking sectors.
Beyond banking concerns, the bill has also drawn scrutiny from the crypto industry and privacy advocates.
A Galaxy Research report warned it could bring about “the single largest expansion to financial surveillance authorities since the USA PATRIOT Act,” granting sweeping new powers to the Treasury Department over digital asset transactions.
Coinbase CEO Brian Armstrong announced on Wednesday that the exchange could no longer support the bill, arguing that it would “kill rewards on stablecoins.”
Later that day, Sen. Scott postponed the markup session, saying, “Everyone remains at the table working in good faith.
Despite Moynihan’s caution over stablecoins, Bank of America, the world’s second-largest bank by market capitalization, has been steadily increasing its involvement in the digital asset sector.
Back in February, Moynihan said the bank was preparing to launch its own stablecoin once regulations allow. Now, new internal guidance shows the banking giant is openly advising clients to consider crypto exposure.
In a recent note, Bank of America’s wealth management division recommended that clients allocate between 1% and 4% of their portfolios to digital assets — one of its clearest endorsements of crypto to date. The guidance spans Merrill, Bank of America Private Bank and Merrill Edge platforms.
The firm’s chief investment office also began coverage of four Bitcoin (BTC) exchange-traded funds (ETFs) on Jan. 5, including:
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Bitwise Bitcoin ETF (BITB)
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Fidelity Wise Origin Bitcoin Fund (FBTC)
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Grayscale Bitcoin Mini Trust (BTC)
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BlackRock iShares Bitcoin Trust (IBIT)
The move marks a notable shift for the traditionally conservative bank, signaling that Wall Street institutions are increasingly integrating crypto products into mainstream investment offerings.
Members of the crypto community criticized Moynihan’s warning as an attempt to stifle innovation and consumer choice.
Appearing on CNBC right after pulling away support from CLARITY Act, Coinbase CEO Armstrong said,
“We can’t really have banks come in and kill their competition at the expense of the American consumer. People in America should be able to earn more money on their money.”
He added that stablecoin is an opportunity for not just crypto companies, but for banks and the government to build products and create a “level playing field” for all.
Crypto analyst Marty Bent, said,
“The banks don’t want consumers to get high-yield savings accounts. Crypto companies want to innovate, and Bitcoin developers and the right to self-custody are caught in the middle.”
Serial entrepreneur and Bitcoin advocate Gary Cardone hit back,
“It is called competition, sir.”
OKX Chief Marketing Officer Haider Rafique said Moynihan’s remarks confirmed that stablecoins directly compete with bank deposits.
“As deposits move, banks lose cheap funding and lending capacity. People move because banks don’t offer fair yield — stablecoins do,” Rafique said. “Technology is exposing that gap, and customers are choosing accordingly.”
Crypto trader Dom Kwok echoed those sentiments, calling stablecoins “the biggest existential threat to banks.”
Related: Bank of America plans to launch stablecoin, says CEO
This story was originally published by TheStreet on Jan 16, 2026, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.