PNC Bank CEO Bill Demchak hit back against the growing push from crypto firms to offer interest on stablecoins, saying the tokens are trying to serve two roles at once — something traditional finance would not be allowed to do without strict oversight.
“The fight right now in D.C. is over some terminology in the GENIUS Act that they’re trying to fix with the Clarity Act, with respect to whether rewards count as interest paid on stablecoins, which was forbidden in the GENIUS Act, as a practical matter,” Demchak said during the bank’s fourth quarter earnings call on Friday morning.
He said stablecoins were created and marketed as a way to move money more efficiently, not as investment products. “That remains to be seen. But it isn’t marketed, nor is it regulated, as an investment vehicle,” he said.
Demchak argued that once a stablecoin begins paying interest, it starts to resemble a regulated financial product already familiar to banks and investors.
“If they actually want to pay interest on it, then they ought to go through the same process,” he said. “Then it looks to me an awful lot like a government money market fund.”
The comments come as lawmakers debate how to define and regulate stablecoins, including whether issuers should be allowed to offer yield without following the same rules as banks or money market funds. The Senate Banking Committee's planned markup of the market structure legislation was postponed earlier this week after Coinbase pulled support for the bill, citing provisions that could harm consumers and competition.
Demchak said banks are calling for a clear distinction between payment mechanisms and investment products.
“So I think banks are sitting here saying, if you want to be a money market fund, go ahead and be a money market fund,” he said. “If you want to be a payment mechanism, be a payment mechanism. But money market funds shouldn’t be payment mechanisms, and you should pay interest.”
PNC has taken limited steps into blockchain technology. In 2021, the bank partnered with Coinbase to explore blockchain-based payments and digital asset infrastructure for institutional clients, while stopping short of offering retail crypto products.
Demchak also pointed to the crypto industry’s influence in Washington as the debate continues.
“The crypto industry has a lot of lobbying power to say, no, we want it all,” he said. “We’ll see how this plays out.”
The debate highlights ongoing tension between banks and crypto firms as regulators weigh how to oversee stablecoins that blur the line between payments and investing.