Stablecoin yield isn't really about stablecoins

The contentious legislative debate over whether stablecoins should pay yield is not truly about stablecoins; it is a proxy fight over the traditional banking model for consumer deposits. For decades, banks have kept the economic upside from deposits while offering consumers safety and liquidity. New technology, however, is shifting consumer expectations toward balances earning yield by default, challenging the premise that consumer balances should be low-yield instruments whose value primarily benefits institutions.

Banks argue that allowing direct yield capture will starve the economy of credit, making mortgages expensive and harming financial stability. However, the author contends this conclusion is flawed; credit will not disappear but will reorganize through more explicit channels like capital markets and securitized instruments, similar to past transitions involving money-market funds. This shift means credit is restructured, not eliminated, with risk and return more clearly surfaced.

This transition is driven by new financial infrastructure that allows consumers to retain custody while earning returns. Intermediation is moving from opaque institutional balance sheets to rule-based, transparent infrastructure. Policymakers face a choice: try to protect the traditional low-yield model or recognize the irreversible shift in consumer expectations toward directly participating in the value their capital generates.

(Source：CoinDesk)