Unchained Why a U.S. Ban on Yield-Bearing Stablecoins Would Help 'Too Big to Fail' Banks - Ep. 840
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May 23, 2025 
Austin Campbell, a financial markets expert and professor at NYU Stern, discusses the potential fallout of a U.S. Senate bill that could ban yield-bearing stablecoins. He explains how this legislation could favor 'too big to fail' banks while disadvantaging American issuers. The conversation dives into the motivations behind the Democrats’ push for the ban and the implications for consumers. Campbell also touches on the evolving landscape for projects like Ethena and examines whether yield-bearing stablecoins should be classified as securities.
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Banks Lobby Against Yield Coins
- The ban on yield-bearing stablecoins stems from lobbying by banking associations fearing competition for deposits.
- Banks profit from paying zero to depositors while lending at higher rates, benefiting executives and investors.
Stablecoins vs Banks
- Stablecoins are not banks; they only preserve money without lending it out.
- Banks lend depositor money at higher rates, engaging in fractional reserve banking, unlike stablecoins.
Ban Helps Offshore, Big Finance
- Banning yield-bearing stablecoins advantages offshore issuers who can pay interest, sidelining U.S. options.
- Large U.S. financial companies benefit as they can offer interest-bearing stablecoin-like products through integrated platforms.