The banking industry is facing a transformative shift: the rise of stablecoins could undermine a century of financial protections and reshape the very foundation of bank accounts.
Not long ago, bank executives were among the loudest critics of cryptocurrency. JPMorgan Chase’s Jamie Dimon once compared Bitcoin to a "pet rock" and called for a blanket ban; Bank of America’s Brian Moynihan labeled crypto an “untraceable tool for money laundering”; and HSBC’s CEO stated bluntly, “We are not into Bitcoin.”
Today, these financial giants are eagerly embracing the crypto wave. On investor calls, in public presentations, and during meetings with Washington regulators, bankers are racing to announce new initiatives—from developing their own digital currencies to offering loans backed by crypto assets.
This shift is driven in part by political opportunism—the Trump family has become vocal crypto supporters—as well as by old-fashioned envy, as Bitcoin more than doubled in the past year, surpassing $100,000.
Behind the scenes, however, there is growing concern. Nine Wall Street executives familiar with their institutions’ crypto plans say many fear the rush into digital assets could endanger personal bank accounts in ways not yet fully understood by regulators or the banks themselves.
At the heart of these worries is a new interbank checking and payments system built on blockchain. Designed by major banks like JPMorgan, Bank of America, and Citi, this stablecoin system would operate with limited consumer safeguards and immature regulatory oversight.
Stablecoins—digital tokens pegged to the U.S. dollar—are poised to upend traditional finance. Customers exchange cash for stablecoins, which can then be used for low-cost international transfers. For banks, this generates near-guaranteed profits: under a bipartisan law passed this summer, banks must invest stablecoin reserves in government bonds or other risk-free assets—keeping all the interest earned.
Crucially, stablecoins break from two core banking principles: they lack federal deposit insurance and cannot be lent out like traditional deposits. This could shrink banks’ lending capacity—a risk the Federal Reserve Bank of Kansas City recently warned could have unintended economic consequences.
“The genie is out of the bottle,” said Mike Cagney, former CEO of SoFi and now head of digital lender Figure. He predicts stablecoin growth will come at the expense of bank deposits: “You don’t need a lot of deposit flight to really buckle the banks.”
Not all are convinced of a coming crisis. Tim Spence, CEO of Fifth Third Bank, remarked, “The consumer checking account is probably safe.” His institution—founded in 1858—plans to accept stablecoins issued by a consortium of major banks.