Banks enter stablecoin market amid deposit flight concerns
Updated
Updated · American Banker · May 4
Banks enter stablecoin market amid deposit flight concerns
3 articles · Updated · American Banker · May 4
JPMorgan's internal stablecoin JPMD is processing more than $1 billion a day for corporate clients, while Mastercard has spent $1.8 billion to strengthen its payments position.
The report says banks risk targeting the wrong stablecoin segment if they focus too heavily on retail deposit flight rather than competing with crypto-native infrastructure and fintech payment rails.
Tether reached a $189.5 billion market value without paying yield, while PayPal's incentive-backed PYUSD has grown to $4 billion, underscoring how quickly the market is taking shape.
Can bank-issued 'tokenized deposits' truly challenge the dominance of established public stablecoins?
As volumes near a quadrillion, will US yield bans hand the stablecoin future to offshore rivals?
Are banks building the next financial system or just becoming on-ramps to someone else's?
How the CLARITY Act’s Stablecoin Yield Ban Could Reshape $6.6 Trillion in U.S. Bank Deposits
Overview
In May 2026, a bipartisan compromise on the CLARITY Act was reached, banning passive stablecoin yields while allowing activity-based rewards, addressing tensions between crypto platforms and traditional banks. This followed the 2025 GENIUS Act, which banned issuers from paying yields but left a loophole for third-party platforms, leading exchanges like Coinbase to offer high stablecoin rewards and creating competitive pressure on banks. The American Bankers Association warned of massive deposit flight risking $6.6 trillion, while the White House offered a more modest impact estimate. Regulatory uncertainty prompted Coinbase to shift to subscription-based rewards. Meanwhile, banks responded by developing their own stablecoins and emphasizing trust. The CLARITY Act now moves to Senate markup, with complex rulemaking ahead, shaping the future balance between innovation and financial stability.