According to the banks, this could trigger a massive shift of deposits from the banking sector to digital assets. The group estimates potential outflows of up to $6.6 trillion.
Such a move, they say, could shrink lending capacity, push interest rates higher, and increase borrowing costs for US businesses and households.
They added:
“Congress must protect the flow of credit to American businesses and families and the stability of the most important financial market by closing the stablecoin payment of interest loophole.”
Industry figures quickly pushed back against the banks’ warning, calling it an attempt to stifle competition.
He said:
“This was no loophole and you know it. 376 Democrats and Republicans in the House and Senate rejected your unrestrained effort to avoid competition. So did one President.”
According to him:
“The banks need to give more competitive offers for savings accounts and such. This kind of competition would be better for the customers of the banks. It’s a simple process: people won’t move money out of banks if the banks give them a good deal.”
