Crypto returns reveal how much banks are shortchanging you and why they seek a congressional ban.

As Congress advances the CLARITY Act, the ongoing debate regarding the distinction between “crypto” and “securities” is coming to the forefront, leading to a familiar cycle of blame.

Critics online contend that the bill’s design may institutionalize benefits for established, regulated firms, with centralized platforms accused of subtly supporting amendments that would hinder DeFi‘s ability to compete fairly.

Market structure is being touted as the primary focus of CLARITY; however, the most significant contention may revolve around distribution.

Rewards from stablecoins transform “holding dollars” into a competing product category, prompting banks to strive to prevent this feature from becoming typical outside the deposit system. Platforms present it as a loyalty benefit instead of interest, while legislators seek terminology that maintains “digital cash” while curbing “hold-to-earn” practices.

Banks are opposing retail stablecoin yields due to competition with deposit interest rates and the payment dynamics that underlie consumer banking.

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The latest Monthly Rate Cap Information from the FDIC, dated December 15, 2025, indicates that national rates in its rate-cap framework were 0.39% for savings, 0.07% for interest checking, and 0.58% for money market deposit accounts.

Additionally, the Treasury reference yield for those non-maturity products stood at 3.89% in the same table.

This gap does not serve as a direct measure of bank profitability but illustrates how retail deposit interest rates can fall significantly below government rates when customer behavior, bundled services, and switching costs maintain balances.

Banking rates

FDIC category (Dec. 15, 2025)	National deposit rate	Treasury reference yield	Gap
Savings	0.39%	3.89%	3.50%
Interest checking	0.07%	3.89%	3.82%
Money market deposit account	0.58%	3.89%	3.31%

Stablecoin yields put pressure on bank deposit rates, and expose the spread

Stablecoin rewards narrow that gap by providing retail users with an alternative method to hold dollar balances with a return that can be close to the short end of the yield curve.

The U.S. Treasury’s daily yield curve series indicates the three-month point at 3.88% on November 28, 2025, placing the market’s cash benchmark nearly in line with the FDIC table’s 3.89% reference.

A stablecoin yield within this range alters the retail question from “Which bank offers the highest rate?” to “Why is my cash return significantly lower than the government rate?”

From a balance sheet standpoint, the pressure is looking ahead since the decision point is based on marginal funding costs rather than historical averages.

If deposits shift from checking and savings into stablecoin balances, banks can react by increasing deposit rates or seeking funding through wholesale channels.

Both options elevate interest expenses, and they can do so rapidly.

As per the Federal Reserve Bank of New York, the Secured Overnight Financing Rate is a broad indicator of the cost to borrow cash overnight secured by Treasury securities, a benchmark that influences repo and other short-term funding markets utilized by major financial institutions.

When retail deposit withdrawals compel banks to rely more heavily on market funding, the cost of that alternative can align more directly with policy rates than retail deposits have historically done.

The retail distribution layer poses the greatest strategic risk for banks.

The hidden cost of higher bank funding reliance: why deposit flight matters

According to Coinbase’s USDC Rewards overview, the program is funded by Coinbase, where rewards accumulate based on balance and the rewards rate, and Coinbase states it does not use or lend USDC without customer consent.

This page also notes that eligibility requirements include a Coinbase One membership in several regions, including the United States and the United Kingdom.

Coinbase’s USDC product page specifies a rewards rate of 3.50% available to Coinbase One members, with subscriptions starting at $4.99 per month.

Even though the precise reward rate may fluctuate over time, programs like this present yield as a standard aspect of maintaining a cash-like balance on a platform that also facilitates transfers and trading.

This diminishes the role of a bank account as the primary place to store dollars.

Banks also differentiate between sustained yields and promotional offers, as the former can reset consumer expectations while the latter often behave like marketing expenditures.

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Binance has executed time-limited campaigns connected to its Simple Earn product.

A Binance announcement revealed one promotion that provided a bonus tiered APR on USDC flexible products, in addition to a real-time APR component.

A separate notice from Binance indicates that assets deposited in Simple Earn may be loaned to other Binance users, including margin and loan products.

It also mentions that large redemption requests could cause delays in redeeming assets temporarily.

For banks, this disclosure is significant because it delineates the difference between a rewards rate funded by platform economics and a bank deposit funded within a supervisory framework.

Nonetheless, both vie for the same retail funds.

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Stablecoin rewards threaten banks’ deposits, and the customer relationship that comes with them

The opposition also reflects the payments and relationship dynamics that are built upon deposits.

Checking accounts are essential for payroll, bill payments, debit transactions, ACH, and fee structures, and they facilitate cross-selling into lending and wealth management.

If a portion of transactional balances transitions to stablecoins in custodial wallets, banks face the risk of losing both funding and customer engagement.

This outflow can occur more swiftly than traditional deposit competition because transfers can be settled around the clock without the same batch constraints as legacy systems.

Regulations have started to define the limits of stablecoin yields, and CLARITY is emerging as the battleground for an unresolved conflict from the GENIUS Act.

The GENIUS Act’s strategy prohibited issuers from paying interest to maintain stablecoins classified as “digital cash,” yet platforms can still advertise “rewards” that operate similarly to yields, shifting the competitive impact towards distribution.

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CLARITY debate draws a line between “yield” and “loyalty” as stablecoin rewards come under fire

In the background lies a narrower yet more volatile drafting dispute: legislators are seeking language that prohibits interest payments merely for holding a stablecoin, while still permitting activity-based incentives framed as payments or loyalty rewards.

This distinction is crucial as it shifts the focus from issuers to distributors: platforms can promote a cash-like balance with a near-Treasury return without the token being categorized as “interest-bearing,” while banks argue that this is effectively deposit interest under a different guise.

The outcome is an effort to limit “hold-to-earn” expectations while allowing for “use-to-earn” initiatives, along with disclosures aimed at preventing rewards from being marketed as risk-free bank-style interest.

The short-term calculations that banks monitor are not simply the difference between a Treasury yield and a single deposit rate.

They encompass deposit retention, deposit repricing, replacement funding, and how swiftly those factors can shift if stablecoin rewards remain close to cash benchmarks.

The FDIC’s December 15, 2025 schedule records 0.07% for interest checking and 0.39% for savings against a 3.89% Treasury reference yield.

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In the meantime, Coinbase’s USDC page lists 3.50% rewards for Coinbase One members, while Binance’s disclosures outline both promotional bonus structures and the capacity to lend Simple Earn assets to other users.

The post Crypto yields expose the exact amount banks are underpaying you, and why they want Congress to ban it appeared first on CryptoSlate.