Stablecoin Panic? Banks Are Chasing Myths, Not Facts, Says Professor

Forget the headlines—the real panic isn't in the crypto markets. It's in the boardrooms.

A leading academic just dropped a truth bomb on traditional finance, arguing that the banking sector's fear of stablecoins is built on sand. Not data, not evidence, but old-fashioned myths dressed up as risk analysis.

The Phantom Menace

Banks see stablecoins and envision a runaway train—systemic risk, lost deposits, and a challenge to their monetary monopoly. The professor's research cuts through the noise. It finds that narrative is fueled more by protectionist instinct than by forensic fact.

Stablecoins aren't shadow banks; they're settlement layers. They don't hoard deposits; they facilitate velocity. The real threat they pose isn't to financial stability, but to profit margins built on slow, expensive legacy systems.

Follow the Money (Or the Fear of Losing It)

The lobbying efforts, the dire warnings to regulators—it all starts to look less like prudent caution and more like a turf war. It's the same playbook used against every disruptive tech, just with fancier suits. When your business model is intermediation, a tool that bypasses you is existential.

One cynical take? The loudest cries about 'consumer protection' often come from institutions that perfected the overdraft fee.

The professor's conclusion is a provocation to the old guard: adapt or be sidelined. The data is clear. The tech works. The only thing unstable might be the banking sector's grip on the future.

Misconceptions About Stablecoin Yields

Based on reports, Malekan listed five specific points where industry talking points have wandered from the facts. He said stablecoins are fully reserved in many cases, and that issuers often park reserves in Treasury bills and bank accounts — activity that can feed, not sap, banking business.

I am disappointed that market structure legislation seems to be held up by the stablecoin yield issue. Most of the concerns bouncing around Washington are based on unsubstantiated myths.

So I’ve written a new article tackling the 5 biggest. They include:

1) Whether stablecoins… https://t.co/U2fQcPNZyV

— Omid Malekan (@malekanoms) January 12, 2026

He also noted that much US credit is delivered outside community banks, through money market funds and private lenders, so the LINK between stablecoins and bank lending is not as direct as some industry statements imply.

Banks Press Lawmakers Over Yield Rules

Lawmakers are racing to settle those questions before a committee markup. The Senate Banking Committee is scheduled to mark up the market structure text on January 15, 2026, and sources say negotiators remain split on whether to restrict third-party yield arrangements tied to stablecoins.

Community banks and trade groups have urged senators to close what they call “yield loopholes,” saying unregulated rewards could lure deposits away and raise liquidity risks.

Malekan focused attention on the distribution of interest from reserve assets. According to his comments, the policy choice is not about banning stablecoins but about deciding whether banks or crypto issuers capture returns on reserves.

If issuers are allowed to share interest or rewards with customers, that could pressure bank profits — a point banks are making loudly in hearings and letters to lawmakers.

Reports have disclosed that committee staff were racing to file a bipartisan market structure text and reconcile yield language ahead of a deadline this week. Negotiations continued into late sessions as senators weighed compromises that could allow some forms of rewards while guarding against run risks and bank disintermediation.

Featured image from Global Finance Magazine, chart from TradingView