Brian Moynihan made a dire warning about stablecoins.
During a January 15 earnings call, the CEO of Bank of America told analysts that as much as $6 trillion in deposits could migrate from the US banking system to stablecoins, roughly 30% to 35% of total US commercial bank deposits.
Moynihan attributed the projection to US 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.
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Moynihan compared stablecoin structures to money market mutual funds, explaining that reserves are typically held in short-term instruments such as US Treasurys rather than recycled into traditional loans.
“If you take deposits, they’re either not going to be able to borrow or they’re going to have to get wholesale financing, and that wholesale financing is going to come at a cost,” Moynihan said.
The head of Bank of America warned that a massive deposit exodus could undermine the ability of banks to issue credit to households and businesses, a cornerstone of US economic activity.
Moynihan’s remarks coincided with a renewed legislative focus on stablecoins.
The latest version of the Senate’s crypto market structure bill, released by Senate Banking Committee Chairman Tim Scott on January 9, includes provisions that prohibit digital asset service providers from paying interest or yield to users for simply holding stablecoins.
However, the draft legislation allows for “activity-based” rewards, such as incentives linked to staking, the provision of liquidity, or the placement of collateral.
More than 70 amendments have reportedly been tabled ahead of a planned committee markup this week, reflecting intense lobbying from both the 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 that it could bring “the single largest expansion to financial oversight authorities since the USA PATRIOT Act,” which would give the Treasury Department sweeping new powers over digital asset transactions.
The CEO of Coinbase, Brian Armstrong, announced on Wednesday that the exchange can no longer support the account, arguing that it “kills the rewards on stablecoins.”
Later that day, Senator Scott adjourned the markup session, saying, “Everyone stay 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 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 allowed. Now, new internal guidance shows 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 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:
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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, indicating 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 withdrawing support from the 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 get more bang for their buck.”
He added that stablecoin is an opportunity not only for crypto companies, but for banks and the government to build products and create a “level playing field” for everyone.
Crypto analyst Marty Bent, said,
“Banks don’t want consumers to get high-yield savings accounts. Crypto companies have to innovate, and Bitcoin developers and their right to custody are caught in the middle.”
Serial entrepreneur and Bitcoin advocate Gary Cardone hit back,
“It’s called a competition, sir.”
OKX Chief Marketing Officer Haider Rafique said Moynihan’s remarks confirmed that stablecoins compete directly with bank deposits.
“As deposits move, banks lose cheap funding and lending capacity. People move because banks don’t offer a fair return – stablecoins do,” Rafike 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, 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 Preferred Source by clicking here.