Banks Want to Ban Stablecoins Because They Work Too Well

Brian Moynihan, the CEO of Bank of America, has said that allowing non-bank companies to pay interest on stablecoins could trigger an outflow of up to $6 trillion from the US banking system - around 30-35% of all deposits. That is why the US banking sector is pushing for a ban on passive income from stablecoins.

I find arguments like this surprising in the 21st century. They remind me of medieval France, when manufacturers of linen and silk protested against wallpaper. When Reveillon invented wallpaper that could be glued to walls, weaving guilds demanded that it be banned, arguing that it would "ruin a large number of honest workers and destroy their livelihoods".

In the same period, France also banned the production of stockings and other inventions. Innovators were forced to leave the country and later bring their products back from abroad. Who benefited from that? Certainly not the French economy.

It may no longer be the Middle Ages, but those who make money from outdated forms of deposits still think in exactly the same way.

Imagine if a bank deposit could be converted into liquid staking tokens, allowing people to keep using their money while still earning yield on it. Would anyone really expect a massive outflow from bank deposits in that case? Instead of looking for ways to build such a business, banks are trying to ban it for everyone else - especially for those who already have all the necessary infrastructure in place.

Under these conditions, it is obvious that bank money will not look attractive to anyone. Stablecoins simply offer a much better alternative.

On top of that, you cannot buy any cryptocurrency with bank money on rabbit.io. With stablecoins, you can easily buy any crypto you want - at the best rates, with no limits and no registration.