Stablecoin Returns Force Banks to Provide Genuine Interest Rates to Customers

According to Patrick Collison, CEO of payments company Stripe, stablecoins—tokenized versions of fiat currencies operating on blockchain—will compel banks and financial institutions to offer competitive yields on deposits.

The average savings account interest rate in the US is 0.40%, while in the EU, it is 0.25%, Collison commented in response to VC Nic Carter’s X post discussing the rise of yield-bearing stablecoins and the future of the sector. Additionally, Collison remarked:

“Depositors are going to, and should, earn something closer to a market return on their capital. Some lobbies are currently pushing post-GENIUS to further restrict any kinds of rewards associated with stablecoin deposits. 

The business demand is evident—affordable deposits are beneficial, but a consumer-unfriendly stance seems like a losing strategy,” he added.

Since 2023, stablecoins have seen an increase in market cap and user adoption, spurred by the passing of the GENIUS stablecoin bill in the US. This legislation established a regulated stablecoin industry but also restricted yield-sharing.

Related: Stablecoin market boom to $300B is ‘rocket fuel’ for crypto rally

Banking Industry fights to restrict yield-bearing opportunities for stablecoins

Amid discussions on the GENIUS stablecoin regulation, the banking lobby opposed interest-bearing stablecoins, as detailed in a report by American Banker.

Banks and their allies in Congress contended that stablecoins providing interest opportunities to customers would threaten the banking system and diminish their market share.