As the U.S. Senate Banking Committee prepares to mark up a major digital asset market structure bill on January 15, 2026, a key debate over stablecoin yields is threatening to stall progress. Columbia Business School adjunct professor and crypto policy analyst Omid Malekan has challenged what he calls five pervasive "unsubstantiated myths" about stablecoins that are influencing lawmakers in Washington.
The core dispute centers on whether stablecoin issuers should be allowed to share interest or rewards from their reserve assets with customers. Community banks and trade groups have urged senators to close "yield loopholes," arguing that unregulated rewards could lure deposits away from traditional banks and raise liquidity risks, potentially threatening up to $6.6 trillion in bank deposits. Malekan and other advocates counter that these fears are largely unfounded.
Malekan systematically debunked five major misconceptions. First, he argued that stablecoin adoption does not automatically drain bank deposits. He explained that stablecoins, often backed by Treasury bills and held in bank accounts, can actually increase domestic banking activity through securities trading and foreign exchange transactions. "Stablecoins increase demand for dollars everywhere," Malekan noted.
Second, he challenged the notion that stablecoins threaten the bank credit supply. Malekan stated that deposit competition might affect bank profits but does not reduce their ability to lend, as banks can adjust reserves held at the Federal Reserve or interest rates paid to depositors. This view is supported by data from the Blockchain Association, which highlighted that U.S. bank deposits exceed $18 trillion, while global stablecoins total just $277 billion.
The third myth is that banks must be protected from stablecoin competition as the primary source of credit. Data from the BIS Data Portal shows non-bank lenders deliver the majority of financing in the U.S. Malekan argued stablecoins could even lower borrowing costs by boosting demand for Treasury assets.
Fourth, Malekan disputed that community banks are most at risk, suggesting large "money center" banks face more real competition. Finally, he countered the idea that protecting borrowers should outweigh savers' interests, stating that "barring stablecoin issuers from sharing their economics is a tacit policy of hurting American savers to benefit borrowers."
Negotiators remain split on whether to restrict third-party yield arrangements tied to stablecoins, with committee staff racing to reconcile language ahead of the markup. Malekan expressed disappointment, stating, "I’m disappointed that market structure legislation seems to be held up by the stablecoin yield issue. Most of the concerns bouncing around Washington are based on unsubstantiated myths." He urged policymakers to focus on evidence, suggesting well-designed stablecoin adoption could enhance savings, boost bank deposits, and foster innovation.
