“This is an existential threat to the banking industry, as well as to the financial system writ large,” Arthur Wilmarth, a professor emeritus of law at George Washington University, told Reuters, adding that taxpayers could ultimately be on the hook.

Congress is rushing to pass major new crypto legislation in the form of a stablecoin bill that could see interest paid out to people holding the dollar-pegged cryptocurrencies, with Bo Hines, who leads Trump’s Council of Advisers on Digital Assets, saying last month that the White House wants a stablecoin bill passed before August.

A stablecoin bill currently headed to the House floor prohibits stablecoin issuers from paying out interest to holders while a twin bill in the Senate’ excludes interest on some types of stablecoins but falls short of banning them.

If permitted, higher-than-average interest stablecoin accounts could see people move their money out of insured bank accounts, opening them up to risk if those crypto companies were to fail.

“Stablecoins are emerging as the first real blockchain use case to be fully integrated into traditional finance, and we are witnessing the early stages of this transformation,” Hina Sattar Joshi, digital assets sales director at TP ICAP, said in emailed comments.

“Strong global momentum in stablecoins is likely to attract institutional interest in a digital asset that has long-term growth potential while acting as a credible bridge between traditional assets and crypto.”

As the two stablecoin bills are brought together by Congress in the coming weeks, lawmakers will have to choose—potentially deciding whether stablecoins will become the de facto checking account tool for both banks and crypto companies or if they’ll remain a sideshow.

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“The government shouldn’t put its thumb on the scale to benefit one industry over another,” Coinbase chief executive Brian Armstrong posted to X earlier this week. “Banks and crypto companies alike should both be allowed to, and incentivized to, share interest with consumers.”

The stablecoin market, led by Tether’s $144 billion USDT, has grown rapidly in recent years, with financial technology companies and Wall Street giants from PayPal to Bank of America rushing to launch their own stablecoins, enticed by the massive $13 billion of profit Tether printed in 2024 as a result of the bitcoin, gold, U.S. Treasury bonds and other financial instruments it holds to back USDT.

“It’s pretty clear there’s going to be a stablecoin,” Brian Moynihan, Bank of America chief executive, said in an interview at the Economic Club it was reported by DL News. “If they make that legal, we’ll go into that business.”