Brian Moynihan issued a grim warning about stablecoins.
During a Jan. 15 earnings call, Bank of America’s CEO told analysts that as much as $6 trillion in deposits could migrate out of the U.S. banking system into stable currencies, about 30 percent to 35 percent of all U.S. commercial bank deposits.
Moynihan attributed the projection to studies by the US Treasury Department. It comes at a time of tensions between lawmakers, regulators and financial institutions over how interest-bearing stablecoins could reshape the country’s banking landscape.
Related: Wall Street wins pay battle on Capitol Hill
Moynihan compared stablecoin structures to money market mutual funds, explaining that reserves are typically held in short-term instruments such as U.S. Treasuries rather than recycled into traditional loans.
“If you’re taking deposits, they’re either not going to be able to lend or they’re going to have to get wholesale financing, and wholesale financing is going to have a cost,” Moynihan said.
The head of Bank of America warned that a massive exodus of deposits could undermine banks’ ability to lend to households and businesses, a cornerstone of US economic activity.
Moynihan’s remarks coincided with renewed legislative attention on stablecoins.
The latest version of the Senate’s cryptocurrency market structure bill, released by Senate Banking Committee Chairman Tim Scott on January 9, includes provisions that prohibit digital asset service providers from paying users interest or returns simply for holding stablecoins.
However, the draft legislation allows for “activity-based” rewards, such as stake-related incentives, the provision of liquidity or the posting of collateral.
More than 70 amendments have reportedly been tabled ahead of a planned committee markup this week, reflecting heavy lobbying from the crypto and banking sector.
Beyond banking concerns, the bill has also drawn attention from the crypto industry and privacy advocates.
A Galaxy Research report warned that it could bring “the largest expansion of financial oversight authorities since the USA PATRIOT Act,” granting expanded 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 the rewards for stablecoins.”
Later that day, Senator Scott adjourned the mark-up session, saying, “Everyone stays at the table working in good faith.
Despite Moynihan’s caution about stablecoins, Bank of America, the world’s second-largest bank by market capitalization, has steadily increased its involvement in the digital asset sector.
In February, Moynihan said the bank was preparing to launch its own stablecoin once regulations allowed. Now, new internal guidelines show the banking giant is openly advising customers 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 guide covers the 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 January 5, including:
-
Bitwise Bitcoin ETF (BITB)
-
Fidelity Wise Origin Bitcoin Fund (FBTC)
-
Grayscale Bitcoin Mini Trust (BTC)
-
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 dropping the CLARITY Act, Coinbase CEO Armstrong said:
“We can’t really have the banks come in and destroy their competition at the expense of the American consumer. The people of America should be able to make more money out of their money.”
He added that the stablecoin is an opportunity not only for crypto companies, but also for banks and government to build products and create a “level playing field” for all.
Crypto analyst Marty Bent said:
“Banks don’t want consumers to get high-yield savings accounts. Crypto companies want to innovate, and Bitcoin developers and self-custody are caught in the middle.”
Serial entrepreneur and Bitcoin advocate Gary Cardone responded:
“It’s called a competition, sir.”
OKX chief marketing officer Haider Rafique said Moynihan’s remarks confirmed that stablecoins are in direct competition with bank deposits.
“As deposits move, banks lose cheap funding and lending capacity. People move because banks don’t offer fair returns – stablecoins do,” Rafique said. “Technology is exposing that gap, and customers are choosing accordingly.”
Cryptocurrency trader Dom Kwok echoed those sentiments, calling stablecoins “the biggest existential threat to banks.”
Related: Bank of America plans to launch stablecoin, CEO says
This story was originally published by TheStreet on January 16, 2026, where it first appeared in the MARKETS section. Add TheStreet as a favorite source by clicking here.
