Just weeks ago, the crypto market was enjoying record highs, is now under heavy pressure. Bitcoin has dropped close to $114,000 after touching its all-time peak, and coins like Ethereum, Solana, and XRP are also deep in the red.
Amid the crypto crash, Wall Street is raising fresh alarms over a possible $6.6 trillion liquidity risk linked to stablecoins. A threat that not only impacts the crypto market but also the whole financial system.
Wall Street Raises the Red Flag
The global crypto selloff has wiped out hundreds of billions, dragging the market’s value down to about $3.88 trillion, its lowest in weeks. The drop comes at a time when Wall Street grows worried about a newly passed Genius Act, which targets stablecoins, digital tokens linked to the U.S. dollar.
Banking giants such as JPMorgan and Bank of America are warning Congress to close loopholes in the law.
They warn that if stablecoin issuers are allowed to offer yields through affiliates, it could cause up to $6.6 trillion withdrawal of deposits from U.S. banks. This means investors might pull trillions from regular bank deposits and put them into stablecoins that pay interest.
Why Banks Are Worried
For the banking sector, deposits are its lifeline, which they use to give loans to families and businesses. If money moves into stablecoins at a massive scale, banks warn that lending could shrink, borrowing costs could rise, and the overall economy could face risks.
This concern is not just theoretical.
A U.S. Treasury report earlier this year warned that the stablecoin market, now about $280 billion, could grow past $2 trillion by 2028, which could reshape the financial system.
Growing Stablecoin Demand In the Globe
This debate comes at a time when the stablecoin industry itself is heating up. While Tether’s USDT continues to dominate, it now faces mounting competition not only from crypto-native companies but also from Wall Street heavyweights, fintech firms, and even technology giants.
Recently, the Japan Financial Services Agency (FSA) announced that it may soon approve its first yen-based stablecoin.
Politics and Big Tech Join the Fight
This battle isn’t just about finance; it’s political, too. Donald Trump, who is now openly supporting crypto, has promoted projects that challenge Wall Street’s power.
At the same time, tech giants and payment firms such as PayPal, Stripe, and Meta are pushing into the stablecoin market, creating more competition and pressure on banks.
Never Miss a Beat in the Crypto World!
Stay ahead with breaking news, expert analysis, and real-time updates on the latest trends in Bitcoin, altcoins, DeFi, NFTs, and more.
Earn more PRC tokens by sharing this post. Copy and paste the URL below and share to friends, when they click and visit Parrot Coin website you earn: https://parrotcoin.net0
PRC Comment Policy
Your comments MUST BE constructive with vivid and clear suggestion relating to the post.
Your comments MUST NOT be less than 5 words.
Do NOT in any way copy/duplicate or transmit another members comment and paste to earn. Members who indulge themselves copying and duplicating comments, their earnings would be wiped out totally as a warning and Account deactivated if the user continue the act.
Parrot Coin does not pay for exclamatory comments Such as hahaha, nice one, wow, congrats, lmao, lol, etc are strictly forbidden and disallowed. Kindly adhere to this rule.
Constructive REPLY to comments is allowed