The U.S. banking sector is reportedly becoming increasingly anxious about the growing popularity of stablecoins that offer returns, with concerns mounting that they could significantly undercut the traditional banking model. That’s according to Austin Campbell, an NYU professor and founder of Zero Knowledge Consulting.
In a post shared on social media on May 21, Campbell—opening with the phrase “The Empire Lobbies Back”—criticized the intense lobbying efforts by banks aimed at curbing the spread of yield-generating stablecoins.
He accused the banking lobby of trying to maintain a monopoly, stating that they’re pressuring lawmakers—especially Democrats—to protect their entrenched interests at the expense of the average citizen. “Banks want you to protect their cartel so they can keep screwing your voters,” he bluntly stated.
Campbell highlighted how banks benefit from the fractional reserve system, enabling them to profit significantly while giving consumers very little in return. Yield-bearing stablecoins threaten that model, and according to Campbell, banks are trying to frame this as a threat to their business.
“This is blatant protectionism,” he said, warning legislators against imposing sweeping restrictions that would limit interest-earning features on stablecoins and urging them not to betray the public’s trust.
A longtime proponent of thoughtful regulation around stablecoins, Campbell previously cautioned Congress in 2023 that failing to pass clear laws would simply push innovation and capital offshore.
Yield-Generating Stablecoins on the Rise
Campbell’s comments arrive at a time when interest-bearing stablecoins are gaining traction. In February, the U.S. SEC greenlit the first regulated yield-bearing stablecoin—issued by Figure Markets—under the ticker YLDS, offering holders a 3.85% return at launch.
Figure isn’t the only firm stepping into this space. Tether co-founder Reeve Collins revealed that the Pi Protocol would introduce a stablecoin, USP, which offers returns through its associated token, USI.
Similarly, Spark Protocol’s USDS stablecoin provides yield via decentralized finance mechanisms and tokenized government bonds. “It’s unreasonable not to earn at least the equivalent of the risk-free rate for holding a stablecoin,” said Sam MacPherson, CEO of Spark’s developer Phoenix Labs, in a recent Bloomberg interview.
While Bitcoin continues to dominate headlines, stablecoins have quietly become one of blockchain’s most transformative innovations. As Coinbase Canada’s CEO Lucas Matheson recently pointed out, global stablecoin transaction volumes now exceed those of Visa by nearly threefold.
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