New York University Professor: Banking lobby groups are feeling "panic" over revenue-generating stablecoins.

Source: Cointelegraph Original text: "New York University Professor: Banking Lobby Groups Feel 'Panic' Over Yield-Generating Stablecoins"

The powerful banking lobby in the United States is "panicking" about the potential of stablecoins to disrupt traditional business models, especially concerning stablecoins that can generate revenue, said Austin Campbell, a professor at New York University and founder of Zero Knowledge Consulting.

In a social media post on May 21 that began with "The Empire's Lobbying Counterattack," Campbell pointed out that the banking industry is particularly alert to the potential of stablecoins to offer interest or rewards to holders.

In a sharp message targeting Democratic lawmakers, Campbell wrote: "Banks want you to protect their monopoly alliance so they can continue to exploit your constituents."

He further explained how the fractional reserve banking system enables banks to maximize profits while providing depositors with minimal interest returns.

Campbell added that banking lobby groups claim that if stablecoins pay interest or any other type of monetary reward, banks will be "harmed."

"This is a blatant appeasement of cartel protection," he stated, while urging the opposition to avoid "harming" its voters by supporting a blanket ban on any type of stablecoin interest payments.

Campbell has long advocated for reasonable stablecoin regulations to be established in the United States. In April 2023, he warned a congressional subcommittee that failure to enact such laws would lead to issuers relocating overseas.

Campbell's sharp assessment of traditional banking comes at a time when stablecoin issuers are launching yield-bearing tokens.

According to Cointelegraph, the U.S. Securities and Exchange Commission (SEC) approved the first yield-bearing stablecoin security issued by Figure Markets in February. The newly launched YLDS token offers a 3.85% yield at the time of issuance.

Figure Markets is by no means the only market participant taking the route of stablecoins with yield.

In February of this year, Tether co-founder Reeve Collins announced that his Pi Protocol would allow investors to mint the USP stablecoin through USI, a payment equivalent that pays interest.

The USDS of Spark Protocol also provides holders with interest income generated from decentralized lending and tokenized government bonds.

"It is unacceptable to hold stablecoins without at least earning a risk-free rate of return," said Sam MacPherson, CEO of Phoenix Labs, the developer of Spark Protocol, in an interview with Bloomberg.

Besides Bitcoin ( BTC ), stablecoins can be considered the most influential application scenario of blockchain technology. Lucas Matheson, the CEO of Coinbase Canada, revealed in an interview with Cointelegraph that the global trading volume of stablecoins is nearly three times that of credit card giant Visa.

Related recommendations: Report: The scale of yield-bearing stablecoins has surged to $11 billion, accounting for 4.5% of the total stablecoin market.