Senator accuses ‘banking cartel’ of trying to kill stablecoin legislation

Bernie Moreno accused major U.S. banks of lobbying against stablecoin legislation ahead of a key Senate Banking Committee vote this week. This escalates tensions between the traditional banking industry and crypto firms over the future of digital dollar payments. Senator calls out bank representative The comments followed the circulation of a letter from American Bankers Association President and CEO Rob Nichols urging bank executives to contact lawmakers before the committee votes on digital asset legislation. In the letter, Nichols warned that the current proposal could "incentivize the flight of bank deposits into payment stablecoins." He added that the bill does not adequately prevent crypto companies from offering interest-like rewards on stablecoins. Moreno responded publicly on X, calling the banking industry a "cartel" attempting to protect its control over deposits and payment infrastructure. "The banking cartel is in full panic mode," Moreno wrote. "Now that innovative stablecoins threaten to break their monopoly and give you actual financial freedom? They're running to Congress again." Moreno also criticized banks for allegedly supporting debanking efforts during the Biden administration and accused them of trying to shield themselves from competition. Banks warn stablecoins could drain deposits The ABA letter framed stablecoins as a potential risk to economic growth and financial stability if consumers begin shifting funds away from traditional bank accounts. Banks rely heavily on customer deposits to fund lending activity and generate revenue. Stablecoins could create new competition by allowing users to hold and transfer digital dollars directly on blockchain networks. The letter called on bank executives and employees to contact senators before Thursday's committee markup of the legislation. The ABA said it supports digital asset legislation and responsible guardrails for crypto markets, but argued that additional changes are necessary to close what it described as a "stablecoin loophole." Coinbase executive says banks already won key concession Paul Grewal pushed back against the ABA's lobbying effort, suggesting crypto firms had already compromised during negotiations. "You got 'idle yield' killed," Grewal wrote on X in response to Moreno's post. "I know because I was there—you weren't." The comment appeared to reference negotiations surrounding whether stablecoin issuers could offer interest-like rewards to users. Yield-bearing stablecoins have become a major concern for banks because they could compete directly with savings accounts and money market products. Stablecoins move deeper into mainstream finance The public dispute highlights how important stablecoins have become within the broader financial system. Originally viewed as a niche crypto product, stablecoins now process billions of dollars in transfers and increasingly underpin payment, settlement, and treasury activity across digital asset markets. The Senate Banking Committee is expected to continue discussions on the legislation later this week. Final Summary Senator Bernie Moreno accused major banks of lobbying to weaken stablecoin legislation ahead of a Senate vote. The banking industry warned that stablecoins could pull deposits away from traditional banks and threaten financial stability.