Stablecoin Myths: Washington’s Crypto Farce Unveiled 😂

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Ah, the grand theater of American legislation! While the Senate wrings its hands over the digital realm, a specter haunts their halls-the elusive stablecoin yield. How quaint, that such a trifle should stall the march of progress! 🤑

Amidst the cacophony of DeFi oversight and token classification, Columbia Business School’s Omid Malekan emerges, a voice crying in the wilderness, to declare: “Washington, thou art mired in myths!” For indeed, the debate is not of evidence, but of phantoms and shadows cast by the flickering candle of fear. 🕯️

Banks vs. Stablecoins: A Phantom Menace or a Farce of Folly?

Malekan, with the precision of a surgeon and the wit of a satirist, dissects five myths that plague the minds of lawmakers. Myths, he says, as substantial as the air they breathe. 🧙♂️

“I am disappointed,” he laments, “that market structure legislation is held hostage by the stablecoin yield issue. Washington, ever the stage for unsubstantiated fears, has birthed five great myths. Behold:”

1) Whether stablecoins… (and here he trails off, for the absurdity speaks for itself) – Omid Malekan (@malekanoms) January 12, 2026

Since 2019, this crypto policy analyst has lectured at Columbia, yet his words fall on ears stopped with the wax of ignorance. If left unchallenged, these myths shall strangle meaningful crypto legislation in its cradle. 👶

  • Myth 1: Stablecoins shrink bank deposits

Ah, the great fear! Stablecoins, those digital harbingers of doom, shall drain the banks dry! Or so the tale goes. But Malekan, with a smirk, reveals the truth: foreign demand and Treasury-backed reserves increase domestic bank deposits. Every stablecoin issued is a dance of dollars, a symphony of banking activity. 🕺💸

🏦$6.6 TRILLION IN BANK DEPOSITS AT RISK

🇺🇸U.S. bankers wail that yield-bearing stablecoins could siphon $6.6T from their coffers, threatening local lending. Yet regulators whisper: “Not overnight, dear sirs.” Still, the fear grows, like a tumor of the mind. 🧠

“Stablecoins increase demand for dollars everywhere,” Malekan declares, his voice cutting through the fog of misinformation. Reward-bearing stablecoins? They amplify this effect, a boon to the economy, not a bane. 🎉

  • Myth 2: Stablecoins threaten bank credit supply

The critics, ever the Cassandras of finance, warn that stablecoins shall starve banks of deposits, thus crippling their ability to lend. Malekan scoffs at this conflation of profitability and credit supply. “False!” he cries. “Banks, with their reserves and margins, shall not falter. Their ability to lend remains intact, even as they adjust their interest rates or tap the Federal Reserve.” 🏛️

Merry Christmas, indeed! Justin Slaughter, former SEC and CFTC advisor, presents a paper by Dr. Lin William Cong. The takeaway? Stablecoin adoption is neutral, or even beneficial, to credit creation and bank deposits. Yet the banks, ever fearful of competition, cry wolf. 🐺

The Blockchain Association joins the chorus, pointing out the absurdity: U.S. deposits exceed $18 trillion, while global stablecoins total a mere $277 billion. Yet the banks, like children fearing the dark, demand protection from this phantom threat. 👻

  • Myth 3: Banks must be protected from competition

A third myth arises, as persistent as a bad smell: banks, the primary source of credit, must be shielded from stablecoins. But the data, cold and unyielding, tells a different tale. Banks account for only 20% of total credit in the U.S. Non-bank lenders-money market funds, mortgage-backed securities, private credit providers-deliver the majority of financing. 🏦

Congress, ever the puppet of lobbying interests, is urged to protect banks by banning risk-free yield or to protect consumers by encouraging 100%-reserve systems. Yet the banks, with their fractional reserves, care not for consumers, but for their own dominance. 👑

Malekan argues that stablecoins could lower borrowing costs by boosting demand for Treasury-backed assets. Yet the banks, like feudal lords, resist the winds of change. 🌪️

  • Myth 4: Community banks are most at risk

The narrative shifts to the plight of community banks, those noble institutions serving Main Street. Yet Malekan, with a wink, reveals the truth: large “money center” banks face the real competition, particularly in payment processing and corporate services. Community banks, with their local and often older client bases, are unlikely to see deposits migrate to digital dollars. 🏡

🚨 Community banks, the lifeblood of Main Street, are under threat! Or so the tale goes. Yet the institutions most threatened by stablecoins are the very ones already basking in high profitability and global operations. 🌍

  • Myth 5: Borrowers matter more than savers

Finally, the grandest myth of all: protecting borrowers should outweigh the interests of savers. Malekan, with a flourish, declares this idea fundamentally flawed. Rewarding stablecoin holders strengthens savings, which in turn supports economic stability. Yet Washington, ever the champion of borrowers, seeks to bar stablecoin issuers from sharing their economics. A policy, Malekan notes, that hurts American savers. 💰

“Barring stablecoin issuers from sharing their economics is a tacit policy of hurting American savers to benefit borrowers,” Malekan observes, his voice dripping with sarcasm. 🗣️

Encouraging saving through innovation benefits both sides of the lending equation, enhancing consumer resilience and economic dynamism. Yet the banks, ever resistant to change, cling to their outdated models. 🏗️

The Real Barrier To Reform

Malekan, with the clarity of a prophet, declares the debate over stablecoin yields a farce, driven by fear and lobbying interests. The Genius Act has clarified the legality of stablecoin rewards, yet Washington remains mired in outdated concerns. He likens the situation to outlawing Tesla to protect the automotive industry. 🚗

“Digital currencies are no different. Most concerns raised by banks are unproven and unsubstantiated,” the Columbia Business School professor concludes, his voice echoing in the halls of power. 📢

With bipartisan legislation poised for markup, the time for evidence-based decision-making is now. Misconceptions about stablecoins hinder regulatory clarity, slow progress, and impede U.S. competitiveness in the global digital dollar economy. 🌐

Malekan urges policymakers to focus on facts over fear, highlighting that well-designed stablecoin adoption could enhance savings, boost bank deposits, and lower borrowing costs, all while fostering innovation in payments and DeFi. 🌟

In short, stablecoins are not the threat many fear. Misplaced myths are. Clearing these misconceptions could unlock the next chapter of American crypto reform, potentially striking a balance between consumer benefits, market efficiency, and financial stability. 🌈

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2026-01-13 14:23