ABA Warns Stablecoin Yields Threaten Community Bank Deposits

The American Bankers Association (ABA) has expressed concern that stablecoin yields could harm community banks, contradicting a White House report that downplayed the threat. The ABA's chief economist, Sayee Srinivasan, and vice president for banking and economic research, Yikai Wang, said that even if total deposits across the banking system stayed flat, money would shift from smaller community banks to larger institutions.

The redistribution of funds could raise funding costs for smaller lenders, making it difficult for them to absorb outflows without turning to more expensive wholesale borrowing. This concern follows a Treasury Department paper from April 2025 that estimated widespread stablecoin adoption could drain as much as $6.6 trillion in deposits from the U.S. banking system.

Despite these objections, ABA researchers acknowledged that households and businesses would have a financial incentive to move funds toward higher-yielding stablecoins. Coinbase CEO Brian Armstrong has previously argued that stablecoin yield would force banks to compete more directly with crypto products.