American Bankers Association Targets Stablecoin Regulations by 2026

The American Bankers Association announced a priority to suppress interest-bearing stablecoins by 2026, addressing concerns about their potential to replace traditional bank deposits..

This move reflects fears of substantial deposit shifts, potentially destabilizing bank lending, as highlighted by Bank of America’s CEO on potential $60 trillion deposit outflows.

ABA Plans 2026 Regulatory Changes to Protect $60 Trillion Ratio

Stablecoins currently operate like money market mutual funds, using reserves for short-term instruments such as U.S. Treasuries. This system moves funds outside the banking sector, reducing the deposit base banks rely on to support lending. This shift poses potential risks, with the ABA warning of significant impacts on household and business lending.

Banking industry leaders are expected to seek legislative changes to address these concerns. The ABA’s Community Bankers Council and joint trade associations are advocating for policy amendments. Their letters urge Congress to close loopholes exploited by exchanges and affiliated firms, underlining the need for regulatory clarity in the market structure.

“Our letters urge Congress/Senate to close ‘loopholes’ exploited by exchanges and affiliated firms.” — ABA et al. joint letter to Senate, Jan 2026

GENIUS Act Precedent and the Future of U.S. Deposits

Did you know? The ABA views stablecoins as a direct threat similar to the rise of money market funds in the late 20th century, a shift that led to historic regulatory changes in the financial sector.

The introduction of such regulations follows the precedent set by the GENIUS Act, implemented to prevent competition between stablecoins and bank deposits. While it banned direct interest on stablecoins, certain loopholes have enabled indirect yields via affiliated platforms. The ABA is pressing for stricter measures to prevent what it describes as potential “trillions displaced”, which could hinder loans to consumers and businesses alike.

Financial and regulatory strategies may focus on limiting stablecoin yields to protect the traditional banking system’s vitality. Analysts suggest that without intervention, banks may see a contraction in their ability to provide loans. Emphasizing regulatory clarity, the ABA maintains that protecting deposit integrity in the U.S. financial landscape is imperative.