As Congress rushes to finalize market-structure legislation, Columbia Business School adjunct professor Omid Malekan is pushing back on what he calls a raft of misconceptions about stablecoin yields — arguing the real policy fight is less about crypto “run” risks and more about who gets paid the interest on the reserves that back those tokens. In a new piece and a tweet thread, Malekan challenged five common industry talking points that he says have distorted the debate in Washington. He rejects the idea that stablecoins will automatically drain bank deposits or collapse lending. Instead, he notes many stablecoins are fully reserved and that issuers frequently park those reserves in short-term Treasury bills and bank accounts — activity that can actually channel liquidity into the banking system rather than siphon it off. “I’m disappointed that market structure legislation seems to be held up by the stablecoin yield issue,” Malekan said. “Most of the concerns bouncing around Washington are based on unsubstantiated myths.” He also highlighted that a large share of U.S. credit is extended outside community banks — through money market funds and private lenders — so the link between stablecoins and traditional bank lending is not as direct as some industry warnings imply. Lawmakers are racing to settle these questions before the Senate Banking Committee marks up market-structure legislation on January 15, 2026. Negotiators remain split over whether to restrict third-party yield arrangements tied to stablecoins; community banks and trade groups are urging senators to close what they call “yield loopholes,” warning that unregulated rewards could siphon deposits and increase liquidity risks. At the heart of the disagreement, Malekan says, is a distributional policy choice: will the interest on reserve assets flow to banks, or to crypto issuers and their customers? Allowing issuers to share that interest as rewards could squeeze bank profits — a concern banks have made forcefully in hearings and letters to lawmakers. Committee staff were reportedly working late to produce a bipartisan bill text that reconciles yield language, as senators weighed compromises that might permit some forms of rewards while trying to prevent run risks and bank disintermediation. (Featured image: Global Finance Magazine; chart: TradingView) Read more AI-generated news on: undefined/news

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