By Dalvin Brown
Wendy Owusu keeps about a quarter of her cash in stablecoins, earning a yield of about 5%. Her traditional savings accounts pay almost nothing.
"I'm gonna go where I'm treated best," said Owusu, a cryptocurrency analyst and entrepreneur in Los Angeles.
Most of her cash is still in bank accounts to cover bills and other transactions that have to be paid in dollars, but she could see a day when she relies entirely on stablecoins, a digital token designed to mimic the dollar or other currencies in the volatile crypto world.
Stablecoins aren't yet widely used as savings or checking accounts, and mostly remain a way for the crypto conversant to buy other digital tokens or transfer money. But the coins are starting to catch on among some crypto users as a way to park money and earn yields -- a development that banks are determined to stamp out before it gets any bigger.
It is enough of a threat that the tokens are now at the center of a fight holding up President Trump's push to formalize crypto's role in the financial system.
In January, crypto exchange Coinbase helped derail the advancement of legislation to establish a legal framework for digital assets, saying it opposes any such push that would prohibit stablecoin rewards. Banks say allowing stablecoins to pay yields would turn the digital tokens into de facto bank accounts, without the same protections.
The crypto and banking industries are working to resolve the impasse, but Trump expressed his frustration at the holdup on Tuesday and railed against banks on social media for undercutting his efforts to make the U.S. the "Crypto Capital of the World."
Already, some crypto users are using stablecoins in place of more traditional services.
Ashley Wright, a 31-year-old blockchain consultant and crypto investor in Toronto, started using stablecoins to send money to family in Jamaica because she said it was faster and cheaper than wire transfers.
"If I send $500, they're gonna get $500," she said.
An added benefit: She said she has earned as much as 12% on the money she holds in stablecoins through the crypto exchange Binance and a crypto lending platform, Aave. For now, she only keeps a small slice of her cash in stablecoins for when she wants to send money abroad.
"We're not at a place just yet where everything is able to be done with stablecoins," she said.
One reason for concern: Stablecoins aren't insured by the Federal Deposit Insurance Corp., a fact stressed by JPMorgan Chase Chief Executive Jamie Dimon in a CNBC interview.
Stablecoins are backed by short-term Treasurys or other reserves so that they maintain a 1-to-1 ratio with the dollar or other currencies. But there is no guarantee their value will remain steady, despite their name.
Circle's USD Coin, one of the biggest stablecoins, briefly lost its peg to the dollar in 2023 after the failure of Silicon Valley Bank, which held some of the reserves that back the token. The company has since moved its reserves to bigger banks.
Big banks are themselves exploring stablecoins to ensure they stay competitive on payments. But they warn that some $6.6 trillion in their customer deposits could be drained if yield-bearing stablecoins are allowed to flourish. The banking industry says that would hurt their ability to lend and would cripple the broader economy, while moving Americans' money into firms that aren't as closely regulated.
Even if they don't offer yields, stablecoins could sap $500 billion in U.S. bank deposits over the next three years, according to estimates from Geoff Kendrick, head of digital-assets research at Standard Chartered.
Corey Frayer, director of investor protection at the Consumer Federation of America, questioned why anyone would rely on stablecoins.
"You give me one real dollar and I give you a fake bank deposit that's not insured by the FDIC and is run by a company that's more likely to fail because it's less regulated," he said.
The crypto industry says people should be able to choose the financial tools that work best for them. Some might be tempted by stablecoins' yields, while others might like that the tokens let them send money instantaneously -- with lower costs than more traditional options.
Sophia Orlando, a cybersecurity engineer in Connecticut, views her stablecoins as a way to hold dollars that can move quickly online.
"It's not changing the value of the dollar," said Orlando, 27. "It's just changing how we send and receive the dollar, without the extra fees, without the banks."
She said she keeps about 20% of her crypto holdings in stablecoins and is waiting for the infrastructure to catch up to the idea.
Write to Dalvin Brown at dalvin.brown@wsj.com
(END) Dow Jones Newswires
Wendy Owuso is a cryptocurrency analyst and entrepreneur. "Crypto Fans Have an Alternative to Savings Accounts. Banks Are Freaking Out.," published at 12 p,m., incorrectly referred to her as Wendy Owusu.
(END) Dow Jones Newswires
Wendy Owusu is a cryptocurrency analyst and entrepreneur. "Crypto Fans Have an Alternative to Savings Accounts. Banks Are Freaking Out.," published at 12 p,m. on March 5, and a correction at 5:12 p.m. on March 5, misspelled her last name as Owuso.
(END) Dow Jones Newswires
March 06, 2026 13:36 ET (18:36 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.