Last October, Jamie Dimon cut the ribbon on JPMorgan Chase’s new Manhattan headquarters. The $3 billion tower, one of the most expensive buildings in New York City history, is considered a monument to Dimon's 20-year legacy at the helm of America’s largest and most powerful bank.
This month, Dimon joined fellow bank CEOs and the industry's lobbying arm in Washington D.C with an urgent message for Congress: kill a provision in the CLARITY Act that would allow stablecoins — digital dollars that pass Treasury yields directly to holders — to compete for your deposits.
When you make a deposit, it feels like the bank is doing you a favor — holding your savings, for free. But it’s not free. The cost is just hidden: Chase earns around $500 a year on your $10,000 balance, and for that same balance they pass you just $1.
Banks have been able to coast on this business model for decades. Nearly one in three Americans bank with Chase, supplying the bank with $2.5 trillion in collective deposits. The bank posted record profits just a year ago.
Smaller banks have tried to compete by offering high-yield savings accounts, but switching banks means rerouting your paycheck, updating every auto-pay, and trusting a new logo — so consumers stay put, even when they're getting a bad deal.
That is, until now. Stablecoin use has increased over 100% in the past two years, shifting from a niche crypto product to mainstream financial infrastructure. The digital dollars have gained traction among enterprises and consumers alike for enabling cheap, global, instant transfers — but this isn’t what threatens banks.
Unlike brick-and-mortar banks, stablecoins make it easy for depositors to earn a fair rate on their dollars. No minimums, no lockups, just market-rate yield accruing daily in an app on your phone.
For a young person deciding where to hold this month's paycheck, the choice between a fintech app that yields 5% and a traditional bank that pays almost nothing is pretty clear.
Banks recognize this, and they have warned Congress that if consumers can easily earn market rates elsewhere, deposits will migrate. Because those deposits fund loans, borrowing could get more expensive.
This argument only holds if banks can't match the rate, but they can. They already do offer competitive yields to high-net-worth clients. For everyday Americans, they choose not to, because they've never had to compete for your deposit.
The question of stablecoin yield sits before Congress in the CLARITY Act, and our legislators have a choice: the next $3 billion headquarters, or the next generation's first home.
Their decision will directly impact the everyday Americans who taught their children to save; those who should be retired by now but aren't because their savings never truly compounded; those who are saving for grad school, or for a down payment, working day and night while their bank skims the yield every month. The question before Congress is whether everyday Americans get to keep their yield.
