Bankers Lobby to Block $300B Interest-Paying Stablecoins as Circle Denies USDC Strait Fees
ABA said interest-paying stablecoins risk draining deposits from small banks, warned $300 billion market could grow to $1–2 trillion and is lobbying Congress to block interest payments by issuers like Circle. Circle CEO denied USDC was used to pay Strait of Hormuz transit fees, citing its regulatory compliance and rapid freeze capabilities.
1. ABA Warns of Risks from Interest-Paying Stablecoins
The American Bankers Association issued a statement highlighting that allowing stablecoins to pay interest could accelerate deposit outflows at small and local banks, increasing their funding costs and weakening lending capacity. The ABA noted the current $300 billion market could expand to $1–2 trillion if interest payments are approved, and it is actively lobbying Congress to block legislation permitting issuers such as Circle to offer yields to USDC holders.
2. Circle CEO Denies USDC Use in Strait of Hormuz
Circle CEO Jeremy Allaire addressed claims that USDC is being used to pay transit fees in the Strait of Hormuz, calling such usage extremely unlikely due to USDC’s strict regulatory compliance and fast asset-freeze mechanisms. He noted that parties seeking sanction-sensitive transactions favor less regulated cryptocurrencies and reaffirmed that USDC is designed primarily for regulated financial services, not high-risk maritime payments.