As Congress debates the Cryptocurrency Market Structure Bill, the question of whether stablecoins should be allowed to pay yield has become a particularly hot topic of discussion.
On the one hand, there are banks fighting to protect their traditional holdings on consumer deposits, which underpin much of the U.S. economy’s credit system. Meanwhile, those in the cryptocurrency industry are trying to return yield, or “rewards,” to stablecoin holders.
At first glance, this seems like a narrow question about one area of the crypto economy. In reality, it is connected to the heart of the US financial system. The fight over high-yielding stablecoins is not actually about stablecoins. It’s about deposits and who gets paid from those deposits.
For decades, most consumer balances in the United States have generated little or no return for their owners, but that doesn’t mean the money has been sitting idle. Banks accept deposits and utilize them in the form of loans, investments, and earnings. What consumers receive in return is safety, liquidity, and convenience (bank runs do happen, but they are rare and are mitigated by the FDIC’s insurance policy). Banks receive the bulk of the economic upside provided by these balances.
That model has been stable for a long time. Not because it was inevitable, but because consumers had no real choice. New technology is changing that.
changing expectations
If anything, the current legislative debate over stablecoin yields is a sign of a major shift in how people expect their money to move. We are moving towards a world where balances are expected to be earned by default, rather than as a special feature for sophisticated investors. Yields are becoming passive rather than opt-in. And consumers increasingly expect to capture more of the returns generated by their capital, rather than having it absorbed by upstream intermediaries.
Once that expectation takes hold, it will be difficult to limit it to cryptocurrencies. It extends to digital representations of value such as tokenized cash, tokenized government bonds, on-chain bank deposits, and eventually tokenized securities. The question is no longer “Should stablecoins pay yield?” And it becomes more fundamental. Why am I getting absolutely nothing from my consumer balance?
This is why the stablecoin discussion feels important to traditional banks. It’s not about new assets competing with deposits. It challenges the assumption that deposits should by default be low-yield products that provide economic value primarily to institutions rather than individuals and households.
Credit objections and their limits
Banks and their allies will respond with serious arguments. If consumers earned yield directly from their balances, deposits would flow out of the banking system and the credit economy would starve. Mortgages will be even more expensive. Loans for small and medium-sized enterprises will shrink. Fiscal stability will be undermined. This concern should be taken seriously. Historically, banks have been the main channel for converting household savings into credit to the real economy.
The problem is that the conclusion doesn’t follow the premises. Giving consumers direct visibility into their earnings does not eliminate the need for credit. The way credit is funded, priced and managed will change. Instead of relying primarily on opaque balance sheet transformation, credit is increasingly flowing through capital markets, securitized products, pooled financing vehicles, and other explicit financing channels.
I’ve seen this pattern before. The expansion of money market funds, securitization and non-bank lending has sparked warnings of a credit collapse. It wasn’t. It’s just been reorganized.
What is happening now is another such change. Trust does not disappear even if deposits are silently rehypothesized. It is redeployed into a system where risks and returns surface more clearly, participation is more visible, and those who take risks earn a proportionate share of the rewards. This new system does not mean less trust. It means rebuilding trust.
From systems to infrastructure
What will make this change permanent is not a single product, but the emergence of financial infrastructure that changes default behavior. As assets become programmable and balances become more portable, new mechanisms allow consumers to maintain control while earning benefits based on defined rules.
Vaults are an example of this broad category, along with automated allocation layers, yield wrappers, and other still-evolving financial primitives. What these systems have in common is that they clarify long-standing opacity about how capital is deployed, under what constraints, and for whose benefit.
There will never be any intermediaries in this world. Rather, we are moving from institutions to infrastructure, from discretionary balance sheets to rules-based systems, and from hidden spreads to transparent allocations.
That is why it is wrong to view this change as “deregulation”. The question is not whether there should be intermediation, but rather who And where does it benefit?
real policy issues
Clearly, the debate over stablecoin yields is not a niche controversy. This is a preview of a larger prediction for the future of deposits. We are moving from a financial system where consumer balances earn little, intermediaries capture most of the upside, and credit creation is largely opaque, to one where balances expect returns, yield flows more directly to users, and infrastructure increasingly determines how capital is allocated.
This transition can and should be shaped by regulation. Rules around risk, disclosure, consumer protection and financial stability remain essential. However, the debate over stablecoin yields is best understood as a decision about the future of deposits, rather than a decision about cryptocurrencies. Policymakers can try to protect the traditional model by restricting who can provide yield, or they can recognize that consumer expectations are shifting toward direct participation in the value that money creates. The former may result in slower changes at the boundary. It doesn’t reverse.
