NOTES / 2026.04.21 · 11-post thread · 18 likes
Stablecoins Break the Beautiful Business Model of Banking
Banks take deposits at zero and lend at five. The one thing that breaks the model is someone offering to pay interest — and stablecoin issuers earn ~4% on the Treasuries backing their tokens.
FIG. 01 — FROM THE ORIGINAL THREAD
If you are a bank, your business model is beautiful. You take people’s money, pay them zero, lend it out at five or more, and keep the difference. Someone else offering to pay interest is the one thing that breaks the model. Stablecoins offer to pay interest.
Stablecoin issuers earn ~4% on the Treasuries backing their tokens. Historically they kept it. The obvious move is to share it with holders. GENIUS stopped issuers from paying directly. CLARITY is fighting over whether exchanges and distributors can. x.com
@NCBankers is asking senators for “an airtight prohibition on payments for stablecoins acting as a store of value… without carve-outs that can be met through nominal activity or loyalty programs.” Translation: make stablecoins worse than us, by law. x.com
This is a masterpiece of the genre: we cannot stop stablecoins from existing, but you must legally mandate they be worse than our products. We are the banks, we own the concept of interest, so you must stop the computer program…
In the 1880s, several US states — e.g. NH, VT — required margarine to be dyed pink. Not labeled pink. Dyed! The theory was nobody spreads pink grease on bread. Technically legal, commercially dead. The Supreme Court struck it down as “in necessary effect, prohibitory.”
So the dairy lobby pivoted. The 1902 Grout Bill taxed yellow margarine 40x more heavily than white. It did not tax margarine. It taxed margarine that resembled butter. Substitute “yellow” for “economically or functionally equivalent” and you are reading the CLARITY Act draft.
The margarine industry shipped white blocks with a separate capsule of yellow dye. Consumers kneaded it in at home. For fifty years, Americans performed a small act of civil disobedience at their kitchen tables every week. Nobody was fooled. The workaround became the product.
In 1933 banks got an airtight prohibition on paying interest on demand deposits. Regulation Q. In 1971 two guys started the first money market mutual fund — formally a security, economically a checking account paying market rates. It now holds $7.6 trillion. Banks lost.
The deeper problem: yield isn’t a side feature for banks. Their profit depends on paying zero on deposits. Stablecoins-that-share-yield is specifically the product that breaks that. This is Blockbuster vs. Netflix. Blockbuster also thought late fees were defensible.
Not every bank is Blockbuster. JPMorgan’s JPMD deposit token — which pays interest because it’s a deposit, not a stablecoin — launched on a public blockchain last year.
The last time the banks asked for an airtight prohibition, they got Vanguard. The time before, somebody got Wisconsin. @Forbes @ForbesCrypto forbes.com
Originally published as a thread on X.