The recently enacted GENIUS Act could usher in one of the most transformative shifts in modern finance — as billions of dollars in retail deposits migrate from traditional banks to stablecoin issuers promising higher yields, says Tushar Jain, co-founder and managing partner at Multicoin Capital.

Jain believes the new legislation will “level the playing field” between banks and stablecoin firms by allowing consumers to access better returns and faster payments, forcing financial institutions to rethink their business models.

Related reporting: AI Agents Could Become Key Liquidity Drivers for Stablecoins, Says Paxos Labs Co-Founder

“The GENIUS Bill is the beginning of the end for banks’ ability to rip off their retail depositors with minimal interest,” Jain wrote on X (formerly Twitter) on Saturday.

The GENIUS (Guaranteed Electronic Notes Issuance Under Supervision) Act, passed in July 2025, establishes a regulatory framework for stablecoin issuers operating in the United States, outlining transparency, reserve, and operational requirements. But one of its most significant side effects, according to Jain, will be competition for retail deposits — long the domain of banks.

“After this bill, Big Tech firms like Meta, Google, and Apple could start competing directly with banks by offering stablecoins with higher yields and smoother user experiences,” he said. “Stablecoins offer instant settlement, 24/7 accessibility, and yields that traditional institutions can’t match.”

Source: Tushar Jain

Banks push back as loophole debate heats up

Traditional banks have already voiced concern over what they call a regulatory loophole in the GENIUS Act. While the law prohibits stablecoin issuers from directly offering yield or interest on their tokens, it does not explicitly restrict affiliated exchanges or partner platforms from doing so.

That means a stablecoin issuer could, in theory, collaborate with an exchange to offer yield-bearing products — sidestepping the direct restriction while still attracting yield-seeking depositors.

Banking groups have lobbied regulators to close this loophole, warning that a mass migration of capital into stablecoins could destabilize the broader financial system. The Bank Policy Institute argued in August that such outflows would “undermine credit creation,” leading to higher interest rates, fewer loans, and increased borrowing costs for small businesses and households.

The U.S. Treasury Department estimated earlier this year that up to $6.6 trillion in deposits could flow out of traditional banks and into stablecoins once adoption accelerates — a seismic shift that would dramatically reduce the banking sector’s funding base.

Stablecoins offer yields up to 10x higher

For now, the incentive to move funds into digital assets is clear. The average U.S. savings account yields just 0.4%, while in Europe, rates hover around 0.25%, according to Stripe CEO Patrick Collison.

In contrast, stablecoin holders can earn between 3.5% and 4% through decentralized lending protocols like Aave, where Tether (USDT) currently offers 4.02% and Circle’s USDC yields 3.69%.

This yield gap, Jain argues, will attract both consumers and businesses to the stablecoin economy, especially as institutional trust grows under the GENIUS Act’s regulatory guardrails.

Big Tech eyes the stablecoin frontier

Jain’s prediction about Big Tech’s entry into stablecoins echoes reports from Fortune, which revealed in June that Apple, Google, Airbnb, and X (formerly Twitter) are all exploring the possibility of launching stablecoins to streamline payments and cut transaction fees.

While none of the firms have formally announced products, analysts believe their participation could supercharge adoption by integrating stablecoin payments into platforms used by billions globally.

The stablecoin market currently sits at $308.3 billion, led by Tether (USDT) at $177 billion and USDC at $75.2 billion, according to CoinGecko. The U.S. Treasury projects that total market capitalization could surge by 566% to reach $2 trillion by 2028, making it one of the fastest-growing sectors in global finance.

“Banks will have no choice but to pay more to retain depositors,” Jain said. “Their margins — and profits — will take a serious hit as competition heats up.”