Banks and cryptocurrency firms are fighting over who gets to capture the yield generated by stablecoin reserves, according to a report by Banking Dive, as tokenized dollar deposits shift interest-bearing float out of regulated deposit accounts and into token issuance programs.

The dispute centers on a structural question: when a customer holds a dollar-pegged token, the interest income on the reserve assets backing that token accrues to the issuer, not to a bank's deposit franchise. Crypto firms argue that yield-sharing arrangements — passing part of reserve interest back to token holders — are a natural product feature and a competitive necessity. Banks counter that paying yield on stablecoin balances amounts to unregulated deposit-taking, replicating the economics of a deposit product without the capital, liquidity and insurance requirements that apply to chartered institutions.

That framing matters because it maps directly onto the unresolved regulatory perimeter. In the United States, federally chartered banks operate under supervision from the Office of the Comptroller of the Currency and the Federal Reserve, with deposit insurance from the FDIC and reserve and capital rules attached. Stablecoin issuers, by contrast, typically hold reserves in money-market instruments and Treasury bills, and the question of whether their liabilities constitute deposits — and whether yield payments constitute an impermissible inducement — remains contested territory between securities, banking and payments regulators.

The business consequences run in both directions. For banks, the threat is deposit migration: every dollar moved from a checking account into a yield-bearing stablecoin is a dollar that leaves the regulated deposit base and the cheap funding it provides. Several large banks have responded by exploring their own tokenized deposit products, seeking to keep the float on their own balance sheets. For crypto firms, the yield question determines whether stablecoins can evolve from payments rails into interest-bearing instruments that compete directly with savings accounts and money-market funds.

The operational stakes are equally concrete. Reserve management — where the backing assets sit, who custodies them, and who earns the spread — is becoming the primary battleground. Issuers that keep reserves at banks give those banks the deposit economics while retaining the token issuance economics. Banks that demand a share of reserve yield, or that restrict issuer access to accounts, can squeeze issuer margins. That tension is now playing out in commercial negotiations over custody mandates, reserve segmentation and revenue-sharing terms.

Regulatory posture shapes each side's leverage. Banking regulators have signaled wariness about crypto-adjacent activity at supervised institutions, which limits how aggressively banks can partner with issuers. At the same time, the absence of finalized federal stablecoin legislation means issuers operate under patchwork state regimes and enforcement-driven expectations rather than a clear charter. Each side is effectively asking Congress and the agencies to resolve the ambiguity in its favor: banks want stablecoin yield treated as deposit activity subject to banking law, while crypto firms want issuance treated as a payments business with permissive yield pass-through.

What follows from the outcome is a market-structure decision of real consequence. If yield-bearing stablecoins are confined to bank balance sheets, tokenized deposits issued by chartered institutions will likely become the dominant form of on-chain dollars, and independent issuers will be pushed toward a payments-only margin model. If issuers win the right to pass yield through to holders, they gain a product that competes head-on with bank deposits — and banks will need to answer with their own yield-bearing tokenized products or lose the float.

The contest will sharpen as stablecoin legislation advances in Washington and as regulators clarify who may lawfully pay interest on tokenized dollar liabilities — a decision that will determine where trillions in potential reserve assets ultimately sit.