The American Bankers Association (ABA) released a statement attacking stablecoins amidst the ongoing debate in Congress concerning the regulation of the cryptocurrency class.<\/span><\/span><\/p>\n The Association, which represents traditional banks such as JPMorgan Chase (NYSE: $JPM) and Citigroup (NYSE: $C), raised an objection to a favorable report published by the White House\u2019s Council of Economic Advisors.<\/span><\/span><\/p>\n The Bankers Association argues that the study ignores the consequences of allowing interest-bearing stablecoins, which could draw business away from mainstream financial institutions.\u00a0<\/span><\/span><\/p>\n More From Cryptoprowl:<\/strong><\/p>\n The bank industry lobbyists claim that the proliferation of interest-offering stablecoins could accelerate deposit outflows, particularly at small and local banks.<\/span><\/span><\/p>\n This, in turn, would increase small banks\u2019 funding costs and weaken their lending capacity, argues the association. \u00a0<\/span><\/span><\/p>\n The American Bankers Association adds that the current stablecoin market, worth $300 billion U.S., is small compared to its future growth projections and scale.\u00a0<\/span><\/span><\/p>\n According to the bankers, if the stablecoin market grows to between $1 trillion U.S. and $2 trillion U.S., the interest rate mechanism could accelerate the flow of funds from banks.\u00a0<\/span><\/span><\/p>\n In such a scenario, it was argued that smaller banks would come under significant pressure and experience substantial contractions in credit supply.<\/span><\/span><\/p>\n The American Bankers Association also raised concerns about the risks of stablecoins evolving into a bank-like model in the future.\u00a0<\/span><\/span><\/p>\n In conclusion, the Bankers Association argued that there are serious risks in letting stablecoins provide interest payments to investors.\u00a0<\/span><\/span><\/p>\n