Stablecoin Panic? Professor Says Banks Are Chasing Myths, Not Facts

Columbia Business School adjunct professor Omid Malekan challenged what he called five common banking-industry misunderstandings about stablecoin yields as Congress moves a market structure bill toward markup this month.

“I’m disappointed that market structure legislation seems to be held up by the stablecoin yield issue,” he said. “Most of the concerns bouncing around Washington are based on unsubstantiated myths,” Malekan added.

Based on reports, Malekan listed five specific points where industry talking points have wandered from the facts. He said stablecoins are fully reserved in many cases, and that issuers often park reserves in Treasury bills and bank accounts — activity that can feed, not sap, banking business.

I am disappointed that market structure legislation seems to be held up by the stablecoin yield issue. Most of the concerns bouncing around Washington are based on unsubstantiated myths.

So I’ve written a new article tackling the 5 biggest. They include:

Lawmakers are racing to settle those questions before a committee markup. The Senate Banking Committee is scheduled to mark up the market structure text on January 15, 2026, and sources say negotiators remain split on whether to restrict third-party yield arrangements tied to stablecoins.

Community banks and trade groups have urged senators to close what they call “yield loopholes,” saying unregulated rewards could lure deposits away and raise liquidity risks.

Malekan focused attention on the distribution of interest from reserve assets. According to his comments, the policy choice is not about banning stablecoins but about deciding whether banks or crypto issuers capture returns on reserves.

If issuers are allowed to share interest or rewards with customers, that could pressure bank profits — a point banks are making loudly in hearings and letters to lawmakers.

Featured image from Global Finance Magazine, chart from TradingView