The ongoing debate surrounding stablecoins is intensifying as financial experts seek to clarify prevalent misconceptions. As lawmakers prepare for a pivotal markup of market structure legislation, prominent academic voices are contributing valuable insights to dismantle the myths associated with stablecoin yields.
In an insightful discussion, Omid Malekan, an adjunct professor at Columbia Business School, emphasized the need for accurate information amid the legislative process. His perspective challenges the idea that stablecoins inherently threaten banking stability and casts doubt on the narratives advanced by some stakeholders.
Understanding the Myths About Stablecoin Yields
Malekan outlined several key misconceptions he frequently encounters, noting that many assumptions surrounding stablecoin functioning are misleading. Contrary to some beliefs, he stated that stablecoins indeed maintain adequate reserves, often investing in secure assets like Treasury bills and bank deposits. This activity can enhance, not undermine, the traditional banking system.
It’s crucial to set the record straight on stablecoin yields. Misinformation is hindering productive discussions.
I addressed five major myths in my latest article, which you can read here:
1) The misconception that stablecoins…
— Omid Malekan (@malekanoms) January 12, 2026
Additionally, he pointed out that a significant portion of US credit is dispensed through channels beyond community banks, such as money market funds or direct lending institutions. This suggests that the correlation between stablecoins and bank lending may not be as direct as commonly suggested.
Banking Institutions Advocate for Yield Regulation
As the deadline for committee markup looms, lawmakers are under pressure to address outstanding questions about stablecoin yields. The Senate Banking Committee aims to finalize the market structure text soon, yet divisions persist regarding the regulation of third-party yield models associated with stablecoins.
Various community banks and industry associations have expressed concerns about potential yield loopholes. They argue that unregulated yield offers could siphon deposits away from traditional banks, thereby escalating liquidity challenges within the industry.
Who Benefits from Interest is Key
Malekan highlighted the pivotal issue surrounding the allocation of interest earned from reserve assets. Rather than a complete ban on stablecoins, the crux of the matter lies in determining whether banks or cryptocurrency issuers will reap the benefits of these returns.
The potential for issuers to share yields with clients could pose threats to bank profitability, a concern increasingly vocalized by financial institutions during hearings and in communications with legislators.
Urgent Negotiations and Guiding Principles
Reports indicate that committee staff are racing against time to finalize a bipartisan market structure bill while addressing yield-related concerns. Continuous negotiations have revealed a willingness among senators to explore compromises, which might permit certain yield structures while simultaneously protecting against risks associated with bank runs and disintermediation.
Image source: Global Finance Magazine, chart source: TradingView
