US Stablecoin Bill Pits Banks Against Crypto Over Whether Dollar-Pegged Tokens Can Pay Interest

On 18 January 2026, the debate over whether US dollar-pegged stablecoins should be allowed to pay interest intensified as Congress worked on a major digital asset bill. Banks warn that interest-bearing stablecoins could pull trillions of dollars in deposits from the traditional system and tighten credit, while crypto firms argue that well‑regulated reserves and transparent yield mechanisms distinguish these products from bank deposits. Lawmakers are considering language that would ban "interest for holding" stablecoins, a move critics say could reshape stablecoin business models and their role in the financial system.