Trump sides with crypto firms in trillion-dollar battle with banks over stablecoin yield - CNBC

The statement attributed to President Trump signals a policy tilt in a long-simmering dispute over whether stablecoin holders can earn interest. Currently, major stablecoins are structured as non-interest-bearing tokens, partly to avoid being classified as securities. Crypto firms argue that allowing yield would make stablecoins a more compelling payments tool, while banks contend that if these dollar-pegged tokens pay interest, they would effectively function as deposit accounts without the same regulatory burden. That would pull funds out of traditional banking and challenge banks’ primary source of low-cost funding.

For markets, the stakes involve the potential redirection of a trillion-dollar asset base. If stablecoin issuers are permitted to offer yield, their reserves could increasingly flow into short-term Treasuries or repo markets, further blurring the line between crypto and regulated finance. The key variable will be whether this stance is translated into formal rulemaking or legislation—such as clarifying whether such products fall under securities law or a new stablecoin framework. Watch for distinctions between "synthetic deposits" and registered securities, as that classification will determine which federal agency retains oversight and how banks respond with competitive products of their own.