Brian Moynihan issued a stern warning about stablecoins.
During an earnings call on January 15, Bank of America’s CEO told analysts that as much as $6 trillion in deposits could be transferred from the U.S. banking system to stablecoins, accounting for approximately 30% to 35% of total U.S. commercial bank deposits.
Moynihan attributed the forecast to U.S. Treasury research. It comes amid tensions among lawmakers, regulators and financial institutions over how interest-bearing stablecoins could reshape the country’s banking landscape.
RELATED: Wall Street wins payments war on Capitol Hill
Moynihan likened the stablecoin structure to a money market mutual fund, explaining that reserves are typically held in short-term instruments like U.S. Treasuries rather than being recycled into traditional loans.
“If you withdraw deposits, they either can’t lend or they have to get wholesale funding, and wholesale funding is going to come at a cost,” Moynihan said.
The president of the Bank of America warned that a massive outflow of deposits could undermine banks’ ability to extend credit to households and businesses, the cornerstone of U.S. economic activity.
Moynihan’s comments coincide with a renewed legislative focus on stablecoins.
The latest version of the Senate Cryptocurrency Market Structure Act, released on January 9 by Senate Banking Committee Chairman Tim Scott, includes provisions that prohibit digital asset service providers from paying interest or earnings to users who only hold stablecoins.
However, the draft legislation allows for “activity-based” rewards, such as incentives related to staking, liquidity provision or collateral issuance.
More than 70 amendments were reportedly submitted ahead of the committee’s planned price increase this week, reflecting intense lobbying from the cryptocurrency and banking industries.
In addition to concerns from the banking industry, the bill has drawn scrutiny from the cryptocurrency industry and privacy advocates.
A report from Galaxy Research warned that this could lead to “the largest expansion of financial regulators since the USA Patriot Act,” giving the Treasury Department sweeping new powers regarding digital asset trading.
Coinbase CEO Brian Armstrong announced on Wednesday that the exchange would no longer support the bill, arguing it would “kill stablecoin rewards.”
Later in the day, Senator Scott postponed the hike meeting, saying: “Everyone continues to work in good faith.
Despite Moynihan’s caution on stablecoins, Bank of America, the world’s second-largest bank by market capitalization, has been steadily increasing its involvement in the digital asset space.
Back in February, Moynihan said the bank was preparing to launch its own stablecoin once regulations allowed. Now, new internal guidance shows that the banking giant is publicly advising clients to consider cryptocurrency investments.
In a recent report, Bank of America Wealth Management advised clients to allocate 1% to 4% of their portfolios to digital assets — one of the clearest endorsements of cryptocurrencies to date. The guide covers Merrill Lynch, Bank of America Private Bank and Merrill Edge platforms.
The firm’s chief investment office also began investing in four Bitcoin (BTC) exchange-traded funds (ETFs) on January 5, including:
-
Bitwise Bitcoin ETF (BITB)
-
Fidelity Wise Origins Bitcoin Fund (FBTC)
-
Grayscale Bitcoin Mini Trust (BTC)
-
BlackRock iShares Bitcoin Trust (IBIT)
The move marks a significant shift from traditional conservative banks and shows that Wall Street institutions are increasingly integrating crypto products into mainstream investment products.
Members of the crypto community criticized Moynihan’s warning as an attempt to stifle innovation and consumer choice.
Coinbase CEO Armstrong appeared on CNBC immediately after withdrawing support for the CLARITY Act, saying:
“We really can’t have banks stepping in and wiping out competitors at the expense of American consumers. Americans should be able to make more money with their money.”
Stablecoins are an opportunity not only for cryptocurrency companies, but also for banks and governments to build products and create a “level playing field” for everyone, he added.
Cryptocurrency analyst Marty Bent said,
“Banks don’t want consumers to get high-yield savings accounts. Cryptocurrency companies want to innovate, and Bitcoin developers and self-custody rights are caught in the middle.”
Serial entrepreneur and Bitcoin advocate Gary Cardone fires back,
“That’s called competition, sir.”
Haider Rafique, chief marketing officer of OKX, said Moynihan’s comments confirmed that stablecoins compete directly with bank deposits.
“As deposits flow, banks lose their ability to cheaply finance and lend money. People move because banks don’t offer a fair rate of return — stablecoins do.” Rafiq said. “Technology is exposing this gap, and customers are making choices accordingly.”
Cryptocurrency trader Dom Kwok echoed the sentiment, calling stablecoins “the biggest existential threat facing banks.”
Related: Bank of America CEO Says Plans to Launch Stablecoin
This article was originally published by TheStreet on January 16, 2026 and first appeared in the Markets section. Click here to add TheStreet as your preferred source.
