Stablecoin issuer Tether and the government of Georgia are pursuing a new digital asset initiative: GELT, a stablecoin pegged to the Georgian lari that would operate under Georgia’s evolving digital asset regulatory framework. The collaboration aims to facilitate cross-border commerce and digital payments within the country, though key details—such as legal issuance arrangements, reserve custodians, and redemption rights—remain to be disclosed as the program unfolds.

On Monday, Tether stated that GELT’s structure, rollout plan, and regulatory implementation would be announced at a later stage. The announcement comes as Georgia advances a regulatory regime for digital assets, including stablecoins, with an emphasis on reserve management, redemption rights, issuer oversight, and anti-money laundering compliance. In March, the National Bank of Georgia signaled it had developed rules governing the initial offering of so‑called “stable virtual assets,” including requirements for full reserve backing, the provision of offering documents, and external auditor verification. According to authorities, the framework is designed to bolster consumer protection, strengthen risk management, and align with international standards.

Georgian Prime Minister Irakli Kobakhidze described the GELT partnership as a step toward a more connected and transparent financial system. Natia Turnava, president of the National Bank of Georgia, welcomed the collaboration as part of the central bank’s broader plan to advance digital financial infrastructure. The announcement did not specify who would legally issue GELT, where reserves would be held, or whether holders would have direct redemption rights. Tether did not provide a definite launch timeline. The company confirmed it had received Cointelegraph’s inquiry but did not offer additional details at publication time.

Key takeaways

• GELT represents a formal collaboration between Tether and the Georgian government to issue a lari‑pegged stablecoin under Georgia’s digital asset rules, with cross-border payments and digital commerce as primary use cases.
• Georgia’s March framework for stablecoins requires prior written consent from the National Bank, mandates full reserve backing with liquidity‑quality assets, and obliges issuers to prepare offering documents verified by external auditors. Non‑VASPs must register before offering stablecoins.
• Specifics about GELT’s issuer identity, reserve custody, and whether holders would have direct redemption rights remain undisclosed; no launch timeline has been announced.
• GELT would extend Tether’s non‑dollar stablecoin portfolio, which already includes MXNT (Mexican peso) and CNHT (offshore Chinese yuan), with plans for a UAE dirham‑pegged token and the recently launched USAT (federally regulated US‑dollar stablecoin). Earlier tokens such as EURT have been wound down or moved toward non‑redeemable status.
• The development sits within a broader regulatory and policy context, reflecting ongoing efforts to harmonize cross‑border crypto activities with established financial regulation and to align with international standards, including potential parallels to MiCA outside the EU framework.

Georgia’s stablecoin regime and the GELT initiative

The March 2024 framework released by the National Bank of Georgia establishes the guardrails for stablecoin issuance within the country. The central bank’s guidance makes clear that stablecoins may not be offered without prior written consent from the regulator, signaling a strict supervisory posture for digital asset offerings. The framework covers virtual asset service providers (VASPs) registered with the central bank; issuers not registered as VASPs must obtain registration before launching any stablecoin offering or related services. Importantly, the rules require that circulating stablecoins be fully backed by reserve assets that satisfy predefined liquidity and credit quality requirements. This emphasis on reserve integrity reflects a broader global regulatory concern around reserve adequacy and risk management for stablecoins serving as payment rails or settlement vehicles.

Additionally, the central bank requires issuers to prepare documentation for the initial issuance and submit these materials for external auditor verification. The regulator said the goal is to strengthen consumer protection, reinforce risk controls, and ensure alignment with international standards. For institutions and market participants, the regime signals a formal path to licensing, ongoing oversight, and heightened due‑diligence requirements for entities seeking to operate stablecoins in Georgia.

GELT’s architecture, governance, and regulatory questions

The public statement outlining GELT’s plans stops short of disclosing critical operational specifics. Notably absent are details about who would legally issue the GELT token, where any reserves would be held, and whether GELT holders would have direct redemption rights or access to reserves. The lack of a launch timeline further underscores the project’s early stage and the regulatory conditioning embedded in Georgia’s framework. As authorities emphasize, any stablecoin formation under the regime would require compliance with reserve standards, disclosure obligations, and independent verification, all of which would shape GELT’s risk profile and usability in commercial contexts.

From a policy and enforcement standpoint, the GELT initiative highlights several compliance considerations for financial institutions, banks, and technology providers operating in Georgia. First, the necessity of obtaining NBG consent points to a formal licensure process that would likely involve ongoing oversight of reserve management practices and governance. Second, the requirement for robust AML/KYC controls and external audit verification aligns GELT with internationally recognized controls that regulators monitor in cross-border payments ecosystems. Finally, the framework’s emphasis on consumer protection and risk management suggests that any GELT‑related products would be evaluated for compliance with disclosure standards, redress mechanisms, and governance transparency, which are critical for institutional confidence and retail trust alike.

Tether’s broader non‑dollar stablecoin strategy and regulatory alignment

GELT would extend Tether’s multi‑currency stablecoin lineup beyond its flagship USDT. The issuer has previously launched MXNT, a peso‑pegged token introduced in 2022 with initial support on Ethereum, Tron, and Polygon. It also operates CNHT, a yuan‑pegged token issued offshore, which has been expanded to multiple networks, and has announced a planned UAE dirham‑pegged token with backing from UAE‑based liquidity. In 2026, Tether launched USAT, a US‑regulated dollar stablecoin designed for the American market, reflecting the company’s strategic pivot toward compliance‑driven, regulator‑friendly offerings. At the same time, Tether has wound down some earlier non‑US‑dollar stablecoins; EURT’s minting was halted, and CNHT is slated to become non‑redeemable in February 2027. These moves illustrate a broader pattern: Tether is diversifying its product suite while tightening compliance and governance around its non‑USD assets.

The GELT development sits within this broader strategic arc, where Tether seeks to provide currency‑specific stablecoins that may appeal to regional economies and financial ecosystems seeking faster, cheaper cross‑border settlement options. For Georgia, the GELT plan could create a new interface between digital assets and traditional financial infrastructure, potentially enabling smoother cross‑border payments, remittances, and digital commerce—subject to the regulatory guardrails and the stability and transparency of reserve arrangements. From a regulatory standpoint, GELT also raises questions about how non‑dollar stablecoins will be treated in Georgia’s licensing framework, how cross‑border activities will be monitored, and how such instruments will interact with global AML/KYC standards and correspondent banking relationships.

Implications for banks, VASPs, and cross‑border settlement

The Georgian framework appears to be designed with a structured approach to licensing, oversight, and risk management. For banks and VASPs operating in or with Georgia, GELT could entail new compliance channels, including enhanced customer due diligence, ongoing monitoring of reserve holdings, and transparent audit reporting. The requirement for reserve backing and external audits would necessitate robust third‑party verification and clear disclosure to customers and counterparties. In cross‑border contexts, GELT could become part of a wider network of currency‑specific tokens that facilitate cross‑border payments, provided jurisdictions recognize and harmonize stability, governance, and regulatory compliance standards. Policymakers and industry participants alike will be watching how Georgia’s approach harmonizes with international standards and how it aligns with broader regional efforts to standardize stablecoin oversight.

From a historical and policy perspective, Georgia’s approach reflects a growing trend toward formalizing stablecoins within national financial architectures. The regime’s emphasis on consent, reserve adequacy, disclosure, and external audit mirrors requirements that have gained traction globally as jurisdictions reconcile innovation with investor protection and systemic risk mitigation. For institutional readers, this case underscores the importance of regulatory calendars, licensing pathways, and cross‑border compliance considerations when engaging with regional digital asset programs and payment rails.

Closing perspective

Georgia’s GELT plan emblemizes a cautious but ambitious avenue for integrating stablecoins into a regulated financial system. While many details remain to be announced, the initiative signals a clear intent to bridge digital assets with traditional monetary infrastructure under formal supervision. As regulators refine reserve and disclosure standards and as Tether outlines governance and issuance details, GELT’s trajectory will likely influence regional discussions on stablecoin licensing, cross‑border settlement, and the resilience of digital asset ecosystems in transitioning economies.

The coming week appears to be macro-led, with U.S. economic data carrying the main calendar risk. Inflation, growth, jobless claims and housing numbers all land before the open, giving markets insight on whether the Fed has room to cut rates.

Prediction markets and the CME’s FedWatch tool currently point to rates remaining unchanged in June’s meeting.

The data comes amid the ongoing Middle East war, which keeps oil prices and inflation risk in focus. Any move higher in energy costs could make softer inflation harder to sustain and weigh on risk assets.

What to Watch

(All times ET)

• Crypto
  • May 26–June 1: Kevin Warsh officially begins his first week as Federal Reserve Chair following his confirmation.
• Macro
  • May 26, 08:00 a.m.: U.S. S&P/Case-Shiller Home Price YoY for March est. 1.1% (Prev. 0.9%)
  • May 26, 08:00 a.m.: U.S. House Price Index YoY for March est. 1.8% (Prev. 1.7%)
  • May 26, 09:00 a.m.: U.S. CB Consumer Confidence for May est. 92 (Prev. 92.8)
  • May 26, 08:30 p.m.: Australia Consumer Price Index YoY for April est. 4.4% (Prev. 4.6%)
  • May 27, 08:00 p.m.: Bank of Korea Interest Rate Decision (Prev. 2.5%)
  • May 28, 04:00 a.m.: Eurozone Economic Sentiment for May est. 92 (Prev. 93)
  • May 28, 07:30 a.m.: U.S. PCE Price Index YoY for April (Prev. 3.5%); Core PCE (Prev. 3.2%)
  • May 28, 07:30 a.m.: U.S. Initial Jobless Claims for period ending May 23 est. 212K (Prev. 209K)
  • May 28, 08:00 a.m.: South Africa Reserve Bank Interest Rate Decision est. 7.0% (Prev. 6.75%)
  • May 28, 09:00 a.m.: U.S. New Home Sales for April est. 0.67M (Prev. 0.682M)
  • May 28, 03:30 p.m.: U.S. Fed Balance Sheet for period ending May 27 (Prev. $6.713T)
  • May 28, 06:30 p.m.: Japan Tokyo Consumer Price Index YoY Prel for May (Prev. 1.5%)
  • May 29, 07:30 a.m.: Canada GDP Growth Rate Annualized for Q1 (Prev. -0.6%); QoQ (Prev. -0.2%)
  • May 29, 08:45 a.m.: U.S. Chicago PMI for May est. 49.5 (Prev. 49.2)
  • May 30, 08:30 p.m.: China NBS Manufacturing PMI for May est. 50.5 (Prev. 50.3)
• Earnings

• Governance Votes & Calls
  • Compound DAO is voting on a proposal to update Compound III supply caps for USDC, USDT, and WETH across Optimism, Polygon, and Unichain. Voting ends on May 25.
  • Aave DAO is voting on a proposal to establish a 3-of-4 rewards operations multisig to manage third-party incentive funding for growth campaigns. Voting ends on May 25.
  • Instadapp DAO is voting on a proposal to rebalance wstUSR vaults, withdraw 750,000 FLUID to fund rewards, configure PST launch limits, and consolidate InstaConnectorsV2 administrative controls to the Team Multisig. Voting ends on May 26.
  • Bancor DAO is voting on a proposal to increase the vortex MaxSaleAmount parameter from 100 to 100,000 for the TAC and IOTA EVM blockchains. Voting ends on May 27.
  • Arbitrum DAO is voting on an amended proposal to transfer 30,765.66 frozen ETH, tied to the rsETH incident, to an Aave LLC-controlled wallet. Voting ends on May 29.
  • Unlock DAO is voting on a proposal to process the May constant payment roll, compensating contributors David Moderator, Ceci Sakura, and Trigs for their roles. Voting ends on May 30.
  • Uniswap DAO is voting on proposals to expand protocol fee infrastructure to BNB Chain, Polygon, and Celo, and to recall 12.5M delegated UNI from the Franchiser system to the Governance Timelock. Voting ends on May 30.
• Unlocks
  • May 26: Plasma (XPL) to unlock 3.38% of its circulating supply worth $7.39 million.
  • May 26: Huma Finance (HUMA) to unlock 20.04% of its circulating supply worth $11.76 million
  • May 29: Grass (GRASS) to unlock 3.55% of its circulating supply worth $11.29 million.
  • May 30: Falcon Finance (FF) to unlock 4.06% of its circulating supply worth $8.26 million.
  • June 1: EigenCloud (EIGEN) to unlock 4.99% of its circulating supply worth $8.48 million.
• Token Launches

Bitcoin mining enters a new era as Bitmain and AntPool push hash rate financialization and ecosystem integration.

Throughout the history of cryptocurrency, mining has remained the ironclad foundation safeguarding Bitcoin’s network security and decentralization. Yet with the rapid emergence of the “BTC Ecosystem” narrative, the mining industry is evolving far beyond the traditional model of simply “mining and selling coins.” A new era centered on the financialization of hash rate is now taking shape.

Against this backdrop, the strategic alliance between Bitmain, AntPool, and leading BTC ecosystem projects signals a profound transformation underway across the mining sector. From hardware efficiency and hash rate allocation to capital deployment and ecosystem integration, the industry is entering a new phase of vertical integration — a strategic evolution increasingly favored by Western capital markets.

Core technology: Pushing the limits of computing efficiency

The technological foundation of this collaboration lies in the deep integration of next-generation mining hardware with the rapidly expanding BTC ecosystem infrastructure. At the center of this evolution is Bitmain’s latest Antminer S21 Pro series, delivering an industry-leading energy efficiency ratio below 15J/T. Through deeper protocol-level optimization, miners can achieve more stable firmware upgrades and significantly faster response speeds when processing complex inscriptions and Bitcoin Layer 2 transactions, laying the groundwork for a more efficient and scalable mining ecosystem.

To meet the growing demand for high-frequency computing within the BTC ecosystem, AntPool and its strategic partners are accelerating the large-scale deployment of liquid-cooling infrastructure. Standardized liquid-cooled mining cabinets not only extend the operational lifespan of ASIC chips but also improve heat dissipation efficiency by nearly 40%. This advancement enables industrial-scale mining farms to transition toward a more stable and efficient “high-frequency profitability” model, further enhancing overall operational performance.

At the same time, industry speculation suggests that future Antminer models may integrate dedicated modules designed to accelerate Bitcoin Layer 2 zero-knowledge proof (ZK) computation. If realized, this innovation would fundamentally redefine the role of mining hardware — transforming miners from simple block producers into decentralized computing providers capable of supporting DApps, sidechains, and broader BTC ecosystem infrastructure.

What is the BTC Ecosystem?

The BTC Ecosystem is operated byADAPT ECOSYSTEM PTY LTD, an Australia-registered company regulated under the oversight framework of the Australian Securities and Investments Commission (ASIC). Established in October 2022, the company focuses on building next-generation mining infrastructure powered by renewable energy, positioning itself at the intersection of Bitcoin mining, sustainable energy, and ecosystem expansion.

Its mining operations are strategically distributed across multiple global regions to optimize both energy efficiency and long-term scalability. In Texas, operations benefit from a mature and highly stable power grid capable of supporting large-scale, continuous mining activity. In Canada, abundant hydroelectric resources provide cleaner and more cost-efficient energy solutions, helping improve operational efficiency while maintaining competitive mining costs.

Meanwhile, in Australia, the company is progressively integrating solar and wind energy into its infrastructure strategy to support the sustainable expansion of its mining ecosystem. This multi-regional energy deployment model reflects the broader industry trend toward greener, more resilient, and institutionally scalable Bitcoin mining operations.

Investment potential: From commodities to creating yield-generating contracts

In the eyes of institutional investors in Europe and the United States, simply holding Bitcoin yields Beta returns, while participating in this “mining + ecosystem” collaboration is the key to obtaining Alpha returns

BTC Ecosystem operates data centers sited in regions tied to long-term renewable energy contracts. Geothermal, hydro, and wind power the fleet, and the company reports operating costs roughly 30% below the industry average as a result. Hardware is a current-generation ASIC, with continuous firmware management and redundancy built into the facility layer.

The renewable footprint is not just an ESG talking point. As global mining difficulty continues to climb, marginal cost decides the difference between a profitable operation and a stranded fleet. Siting compute near cheap, contracted renewable power is the structural advantage the company is building around.

Contract tiers and a $15 no-deposit trial

The platform’s contract menu is tiered by capital commitment and duration. Headline tiers include:

• A $15 welcome contract is activated at signup, returning $0.53 per day. This contract is designed to let new users see daily settlement before committing capital of their own.
• A $1,500 contract over 10 days, returning approximately $21.75 per day.
• A $9,000 contract over 20 days, returning approximately $142.20 per day.
• A $30,000 contract over 30 days, returning approximately $528 per day.
• Institutional-scale allocations up to $300,000, with daily returns reported in the four-figure range.

Earnings settle to user accounts on a 24-hour cadence. Withdrawals become available once a balance reaches $100. The platform supports BTC, ETH, USDT (ERC20 and TRC20), LTC, BCH, XRP, SOL, and DOGE for both deposits and payouts.

Industry observations and future outlook

This strategic collaboration sends a clear signal to the market: Bitcoin is evolving beyond “digital gold” into a decentralized computing platform. As the BTC ecosystem expands, mining infrastructure is no longer limited to block production, but is becoming a core layer supporting Layer 2 networks, DApps, and on-chain computation.

At the same time, ESG compliance and institutional adoption are accelerating industry transformation. Bitmain’s high-efficiency mining hardware aligns more closely with Western ESG standards, making large-scale mining infrastructure increasingly attractive to institutional capital, including pension funds and insurance investors.

However, as industry giants strengthen collaboration and improve operational efficiency, hashrate decentralization remains a key concern within the crypto community. In response, AntPool and its partners have emphasized more transparent pooling mechanisms and governance models. Ultimately, this shift represents not only an advancement in mining technology, but also a new era of capital efficiency — where transforming “cold computing power” into a thriving ecosystem may define the next crypto cycle.

For more information, visit the official website.

A fresh rotation of whale capital is beginning to hit the XRP Ledger ecosystem, and traders previously positioned in Near Protocol ($NEAR) and Hyperliquid ($HYPE) are now turning attention toward SurgeXRP, the XRPL-based real estate marketplace whose ongoing $SGP presale is rapidly gaining momentum across crypto communities.

As profits continue flowing out of already-expanded narratives, many investors are now aggressively searching for earlier-stage opportunities with stronger upside potential before mainstream attention arrives.

That search is increasingly leading toward XRP ecosystem projects, particularly those connected to real-world assets.

SurgeXRP has quickly emerged as one of the most talked-about XRP presales after early contributors pushed the project beyond 10% of its presale soft cap within days of launch, triggering growing speculation that the current entry window may not remain open for long.

[Join SurgeXRP Presale]

What is driving the momentum is not just hype.

It is the structure behind the presale itself.

Unlike conventional crypto launches that lock in fixed valuations before public participation begins, SurgeXRP has removed the fixed token price entirely.

There is no set presale valuation.

Instead, the final price of $SGP will be determined entirely by the total amount of XRP raised during the presale period, creating a market-driven structure that is already fueling aggressive positioning from XRP whales and high-conviction traders attempting to secure exposure before public trading begins.

At the same time, the project has confirmed planned listings on XPMarket and MagneticDEX at a valuation 30% higher than the final presale price, creating an additional layer of urgency among early contributors.

For many traders, the logic is simple: position before the market fully notices.

Why Traders From NEAR & Hyperliquid Are Watching SurgeXRP

Whale rotations are one of crypto’s strongest early signals.

Once major gains begin slowing in established narratives, larger traders often move aggressively into earlier-stage sectors before retail momentum follows.

That pattern now appears to be forming around XRPL real-world asset infrastructure.

SurgeXRP is building a marketplace designed to bring rental real estate ownership on-chain through the XRP Ledger, allowing users globally to access fractional participation in income-generating rental properties using blockchain-based settlement and ownership infrastructure.

As the real-world asset sector continues becoming one of crypto’s fastest-growing narratives, many investors increasingly believe XRPL is positioned to become a major blockchain for tokenized assets due to its low fees, fast settlement, and native tokenization capabilities.

That narrative is helping SurgeXRP gain traction rapidly.

Additional Presale Incentives Fueling FOMO

The project has also introduced multiple bonus structures that are intensifying competition throughout the presale.

The first 100 contributors receive a 10% bonus allocation on purchased SGP tokens.

In addition, SurgeXRP is preparing to launch a real-time contributor leaderboard where the top 20 contributors will receive another 10% bonus allocation.

The upcoming live dashboard will allow users to monitor:

Estimated SGP allocations

Total XRP raised

Leaderboard rankings

Bonus eligibility status

Presale milestone progress

[Buy SGP Token]

$SGP Presale Details

Blockchain: XRP Ledger

Token: $SGP

Total Supply: 200 million SGP

Presale Allocation: 100 million SGP

Presale Price: Determined by total XRP raised

DEX Listings: XPMarket & MagneticDEX

Planned Listing Valuation: 30% higher than final presale price

First 100 Bonus: 10%

Top 20 Leaderboard Bonus: Additional 10%

As momentum across XRPL and RWA narratives continues accelerating, many traders believe SurgeXRP could become one of the most closely watched XRP ecosystem launches before the next phase of the market begins.

Website: surgexrp.com

Join Presale: surgexrp.com/presale

Whitepaper: docs.surgexrp.com

Telegram: t.me/surgexrpdotcom

X: x.com/surgexrpdotcom

Disclaimer: This is a Press Release provided by a third party who is responsible for the content. Please conduct your own research before taking any action based on the content.

The CLARITY Act cleared the Senate Banking Committee 15-9 on May 14, 2026, but the biggest threat to its passage was never the crypto skeptics or the SEC holdouts. It was the American Bankers Association. The ABA spent April and May running an emergency lobbying campaign to close what it calls the “stablecoin yield loophole” in the bill, a provision that lets crypto exchanges pay activity-based rewards on stablecoin balances. The ABA’s own research estimates that yield-bearing stablecoins could grow the market from $300 billion to $2 trillion at the direct expense of bank deposits, reducing lending capacity by 20 percent or more. The fight is not about consumer protection or financial stability. It is about banks defending a profit model built on zero-yield checking accounts against a structurally superior alternative. This is the political fight nobody is properly explaining.

What the loophole actually is

The CLARITY Act, in its current form, contains a provision that has become the most contested single fight in crypto legislation in 2026. Most coverage refers to it vaguely as “stablecoin yield provisions” without explaining what is actually at stake. The specifics matter.

The 2025 GENIUS Act, which established federal stablecoin regulation, prohibits stablecoin issuers from paying interest or yield on payment stablecoins. The ban applies to the issuer (Circle for USDC, Tether for USDT, Ripple for RLUSD, Paxos for various tokens). The intent was to keep stablecoins working as payment instruments rather than competing with bank deposits.

The CLARITY Act contains language that, as currently drafted, lets crypto exchanges and digital asset service providers offer rewards on stablecoin balances held with them, even though the underlying issuer cannot pay yield directly. The Tillis-Alsobrooks compromise language, released in early May, refined the original draft. The compromise prohibits rewards that are “economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.” But it allows rewards tied to “activity-based” participation in exchange membership programs, including rewards calculated by reference to balance, duration, and tenure.

That last clause is the loophole the banking industry is fighting. From the ABA’s perspective, an exchange offering a 4 percent reward on USDC balances held in a membership program is functionally identical to a bank paying 4 percent interest on a checking account. The fact that the reward is technically tied to “activity” rather than balance does not change the economic reality for the consumer. The depositor sees yield. The depositor moves money. The bank loses the deposit.

The banking industry is correct this is a loophole in the original GENIUS Act framework. Whether it should be closed is the political fight that has dragged CLARITY’s path through the Senate Banking Committee.

The deposit flight argument

The American Bankers Association’s central argument against the CLARITY language is the threat of deposit flight, and the numbers the ABA cites are striking enough to deserve serious examination.

On April 13, 2026, the ABA published its own commissioned study estimating that yield-bearing stablecoins could grow the global stablecoin market from approximately $300 billion today to $2 trillion within several years. The growth, the ABA argues, would come largely at the direct expense of traditional bank deposits, particularly checking accounts and money market accounts that currently pay little or no interest.

A coalition of banking trade groups, including the ABA, Bank Policy Institute, Independent Community Bankers of America, Consumer Bankers Association, and Mid-Size Bank Coalition of America, wrote to Senate Banking Committee leaders in early May, warning that “research indicates deposit flight driven by the widespread adoption of yield-bearing stablecoins could reduce consumer, small-business, and agricultural lending by one-fifth or more.”

This is the headline number that gets cited in coverage. A 20 percent reduction in lending capacity would be a material macroeconomic event. Banks fund commercial loans, mortgages, small business credit, and agricultural lending substantially from deposit bases. If deposits flee to yield-bearing stablecoins, the funding capacity for those loans shrinks proportionally. The banks’ argument is that this is not a marginal concern. It is a structural threat to the way credit flows through the US economy.

The argument has surface plausibility. The FDIC’s own analysis of the 2023 spring bank failures (Silicon Valley Bank, Signature Bank, First Republic) found depositors with substantial uninsured funds were far more likely to run during stress events than insured retail depositors. The pattern suggests deposit stability is more fragile than banks publicly admit, particularly for uninsured balances and sophisticated depositors who actively manage cash positions.

What the deposit flight argument leaves out is the most important context. American checking accounts currently pay close to nothing. The national average interest rate on checking accounts is approximately 0.07 percent. On savings accounts, the average is approximately 0.43 percent. Both numbers have stayed near zero through the entire post-2008 era of low interest rates and have not risen materially even as the Federal Reserve raised the federal funds rate to over 5 percent in 2024.

The gap between what banks pay depositors and what banks earn on those same deposits has been one of the most profitable elements of the banking business for over a decade. Banks take in deposits at near-zero cost, lend them out at much higher rates, and capture the spread. The arrangement works for banks precisely because depositors have had no comparable alternative.

Yield-bearing stablecoins backed by US Treasuries can offer 3 to 5 percent returns to holders, depending on the underlying yield environment. The math is not subtle. A depositor with $10,000 in a zero-yield checking account is giving up roughly $400 per year in potential interest income. A depositor with $100,000 across various bank accounts is giving up roughly $4,000. The choice between zero yield in a bank account and 4 percent yield in a tokenized money market alternative is not a choice most rational consumers would make in favor of the bank, if the alternative existed at scale.

This is what the ABA’s deposit flight argument actually means in plain English. Banks are afraid the loophole will let consumers earn what their deposits should arguably have been earning all along. The “deposit flight” the ABA is warning about is, in part, consumers rationally responding to a better product.

What the banks are actually defending

The honest framing of the banking industry’s position requires understanding what banks are actually trying to protect.

The first thing banks are protecting is the zero-yield checking account business model. American banks currently hold approximately $17 trillion in customer deposits. A substantial portion of those deposits are in non-interest-bearing checking accounts or low-interest savings accounts. The interest rate banks pay on these deposits has been compressed near zero for over a decade. The income banks generate from lending these deposits at market rates is, in turn, one of the most reliable profit streams in the industry.

If stablecoins offering 4 to 5 percent yield became widely available and easy to access, the economic logic for keeping money in zero-yield bank accounts would weaken substantially. Banks would face a choice: raise deposit rates to compete (which would compress their net interest margins and reduce profitability), or lose deposits to stablecoin alternatives (which would force them to seek more expensive funding sources or reduce lending).

The second thing banks are protecting is the regulatory moat. Banks run under extensive regulatory requirements (capital adequacy, liquidity coverage, FDIC insurance assessments, Community Reinvestment Act obligations, Bank Secrecy Act compliance) stablecoin issuers do not face in the same form. The CLARITY Act would let stablecoin-related products compete with bank deposits without imposing equivalent regulatory burdens on the stablecoin side. Banks argue this creates an unlevel playing field. The argument has merit.

The third thing banks are protecting is the structural role of banks in credit creation. Under the current US banking system, deposits at commercial banks are the primary funding source for consumer and commercial lending. If deposits migrate to stablecoins, the funding model has to adjust. Banks would need to raise capital through wholesale funding (more expensive and less stable), or the lending capacity of the system would shrink, or some combination of both. The ABA’s argument this could reduce lending by 20 percent or more is contested but not implausible.

The fourth thing banks are protecting is their political position. Banking is one of the most heavily regulated industries in the United States, and the banking industry has spent decades building relationships with Congress, regulators, and the Federal Reserve. The political infrastructure banks have built gives them significant influence over financial legislation. Allowing stablecoins to compete with deposits would, over time, shift some of that political power to a new industry (the crypto industry) banks have historically opposed. Banks are not just defending their economic interests. They are defending the political ecosystem that protects those interests.

None of this is necessarily improper. Industries lobby for their interests. Banks have legitimate concerns about deposit funding, regulatory parity, and systemic stability. The argument is not that the banking industry’s position is illegitimate. The argument is the banking industry’s position is being framed as consumer protection and financial stability when it is, more straightforwardly, a defense of the existing profit model against a competitive threat.

The crypto industry’s response

The crypto industry’s pushback against the ABA campaign has been unusually pointed for what is typically a politically careful sector.

Paul Grewal, Chief Legal Officer at Coinbase, responded directly to the ABA’s lobbying campaign in early May. His argument was that banks have already had their preferred outcome in the GENIUS Act, which banned yield payments by stablecoin issuers themselves. Banks won “idle yield killed,” in Grewal’s framing, which was already a loss for consumers but a clear win for banks. The CLARITY Act compromise on activity-based rewards represents a further concession to banking industry concerns, and Grewal’s view is that the banks should “take yes for an answer.”