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The core issue fueling tensions is the way crypto exchanges like Coinbase are offering incentives to users. Banks have argued that such rewards resemble interest payments, which are currently restricted by recent regulations. The banking industry’s concern is that these competitive incentives could undermine traditional deposit models and disrupt established financial practices.
A recent Treasury Department report underscores the urgency of this concern, revealing that approximately $6.6 trillion could potentially shift from bank deposits into stablecoins. This shift is driven largely by consumers seeking higher returns and more attractive options, which could significantly impact the stability and flow of capital within the traditional banking system.