Brian Moynihan issued a dire warning about stablecoins.
In a Jan. 15 earnings call, Bank of America’s CEO told analysts that a total of $6 trillion could migrate from the U.S. banking system to stablecoins, about 30% to 35% of total U.S. commercial bank deposits.
Moynihan attributed the projection to a U.S. Treasury Department study. This comes at a time when there is tension among 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 held in short-term instruments such as U.S. Treasuries rather than redeployed into traditional borrowing.
“If you take out deposits, they’re either not going to be able to borrow or they’re going to have to get wholesale funding, and that wholesale funding will come at a cost,” Moynihan said.
The head of Bank of America has warned that a massive flight of deposits could undermine banks’ ability to issue loans to households and businesses, the cornerstones of US economic activity.
Moynihan’s comments coincided with a renewed legislative focus on stablecoins.
The latest version of the Senate 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 users interest or yield for holding stablecoins.
However, the draft law allows for “activity-based” rewards, such as incentives linked to staking, liquidity provision, or collateral posting.
More than 70 amendments were reportedly filed ahead of this week’s planning committee markup, reflecting intense lobbying from both the crypto and banking sectors.
Aside from banking concerns, the bill has also drawn scrutiny from the crypto industry and privacy advocates.
A Galaxy Research report warned that it could lead to “the single largest expansion of financial surveillance authorities since the USA PATRIOT Act,” giving the Treasury Department sweeping new powers over digital asset transactions.
Coinbase CEO Brian Armstrong announced Wednesday that the exchange could no longer support the bill, arguing that it would “kill rewards on stablecoins.”
Later that day, Sen. Scott adjourned the markup session, saying, “Everyone works in good faith to be at the table.
Despite Moynihan’s caution on stablecoins, Bank of America, the world’s second largest bank by market capitalization, continues to increase 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 guidance shows that 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 the clearest endorsements of crypto to date. The guidance spans 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:
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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 significant shift for the traditionally conservative bank, signaling that Wall Street institutions are 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 after withdrawing support from the Clarity Act, Coinbase CEO Armstrong said,
“We really can’t have the banks come in and kill their competition at the expense of the American consumer. The people of America should be able to make more money with their money.”
He added that stablecoins are an opportunity not only for crypto companies, but also for banks and governments to build products and “level the playing field” for everyone.
Crypto analyst Marty Bent said,
“Banks don’t want consumers to get high-yield savings accounts. Crypto companies want to innovate, and are caught between bitcoin developers and the right to self-custody.”
Serial entrepreneur and Bitcoin advocate Gary Cardone retorted,
“It’s called competition sir.”
OKX Chief Marketing Officer Haider Rafiq said Moynihan’s comments confirm that stablecoins compete directly with bank deposits.
“When deposits move, banks lose cheap funding and lending capacity. Banks don’t offer reasonable yields – stablecoins do,” Rafiq 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.”
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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.
