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This week Alex Johnson (Fintech Takes) and Nikil Viswanathan (CEO, Alchemy) join our host Simon Taylor to unpack the stablecoin yield fight stalling crypto legislation, why the institutional risk-reward calculus has flipped, and what the privacy debate on public blockchains actually looks like in 2026.

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The Yield Fight Nobody Should Be Having

The GENIUS Act clarified a lot about stablecoins. What it didn't clarify - whether affiliated parties like Coinbase or PayPal can offer yield on stablecoin holdings - has become the single biggest obstacle to passing the Clarity Act, the companion bill now stuck in Senate Banking.

As Alex Johnson laid it out: banks are "really freaked out by the idea that stablecoins can act not just as a payment alternative, but as an alternative for deposit accounts, savings accounts." They've focused their lobbying power on the Senate Banking Committee, and the result has been a back-and-forth that keeps stalling progress. Coinbase and Brian Armstrong "really want to die on this hill," which means every time a compromise gets close, it falls apart again.

Simon noted from his own conversations with regional banks that the Clearing House doesn't actually do real-time settlement — it settles roughly every six hours — and that bank-issued stablecoins could reduce their credit and settlement risk while getting money in the door sooner. But that practical upside is getting buried by the yield debate.

The White House Council of Economic Advisors (CEA) recently put out a report concluding yield-bearing stablecoins would have minimal impact on bank deposits. Banks have their own studies suggesting otherwise. Johnson's take was blunt: "I found banks' fear on this particular topic to be a really interesting indicator of how little confidence they have in the value they provide to their customers today."

His core argument: bank lending is "vastly more lucrative than holding T-bills." If banks need to pay up a bit more on deposits to compete, they're positioned to do it, because they make more money than stablecoin issuers sitting on Treasury reserves. The fight, in his view, is "really stupid."

Simon offered a useful framing here: "Deposits are money that likes to stay still. Banks don't want that money to move." Stablecoins, by contrast, are money that moves — and that distinction matters. Banks aren't really losing deposits to stablecoins; they're losing the movement of money. If they're the ones issuing stablecoins, the deposit flight concern largely disappears.

Nikil Viswanathan framed it differently as regulatory capture. "Banks had kind of a monopoly on holding customers' money, and they didn't give a great service in return for it. They kept all the yield, and now that's changing." His view: whether this specific provision passes now or later, "this cannot be held off forever."

Johnson offered a historical parallel worth noting. During the Civil War, when Congress standardized the dollar and imposed a 10% tax on state bank currencies (effectively taxing them out of existence), the assumption was state banks would simply die. Instead, they invented the checking account. "It came from: we have to compete, we have to innovate, we have to build something new that customers want in order to stay relevant." The implication for today's banks facing stablecoin and crypto rails is hard to miss.

The Institutional Playbook

The broader context here is that the risk-reward calculation for institutions has completely inverted. Viswanathan, whose company Alchemy works with JPMorgan and other major banks, described the shift: in 2017, blockchain adoption inside banks was "a research experiment by a small set of people-call it 5-10 people in a bank." When the market crashed, everything got killed, because the risk of regulatory scrutiny was high and the reward was unclear.

Now? "The risk has decreased very significantly through all the government regulations and regulatory clarity. The reward has also increased." He pointed to Coinbase, Robinhood, and Revolut making a significant portion of their revenue from crypto-"and definitely a much higher profit margin business line than their core business." Meanwhile, "Coinbase is sitting here taking ~3% on all staking rewards. That's like 100x of what these banks are getting in terms of spreads and fees."

Viswanathan outlined the three steps virtually all large financial institutions are working through: first, give customers exposure to crypto-sometimes through derivatives. Second, let customers custody actual assets. Third, give customers access to DeFi. That third step, he noted, will come in two flavors: raw DeFi for those who want it, and a wrapped version where "they won't even know it's crypto. It will be: I'm getting a higher yield, or I'm giving out a loan."

Privacy, Validators & the Regulatory Shift

In 2019, the government sent letters threatening institutions that signed up as validators for Facebook's Diem. In 2026, Visa, Stripe, and Zodia Custody  (Standard Chartered's digital asset arm) are voluntarily running validators on a payments blockchain. As Viswanathan put it: "We've done a 180 in the other direction."

That shift extends to infrastructure questions like privacy. Viswanathan said the private vs. public blockchain debate is "essentially resolved" - private chains failed because they were siloed, couldn't keep up with the pace of technology, and weren't where customers are. The path forward is public blockchains with privacy layers. Johnson raised a fair tension: privacy on permissionless infrastructure "undercuts that crypto value proposition of everything's transparent, everything's on the chain," and regulators will need mechanisms to stay comfortable.

On the SEC's staff statement that self-custodial wallets and DeFi interfaces aren't broker-dealers, both guests saw the regulatory clarity as positive, but diverged on consumer risk. Johnson flagged that as DeFi interfaces become more consumer-friendly, "we will bring people into that ecosystem that maybe don't have that level of rigor." Viswanathan pushed back, arguing the accredited investor framework itself is "one of the most unfair things" - locking non-wealthy investors out of high-growth opportunities.

Where This Lands

What stood out in this conversation wasn't any single headline -  it was watching a banking-focused fintech analyst and a crypto-native infrastructure CEO independently reach the same read: that banks' fear of stablecoin yield says less about the actual deposit risk and more about how thin their competitive moat has become. Johnson thinks bank lending economics still give incumbents a structural edge if they're willing to use it. Viswanathan thinks they'll have to, whether it's this quarter or five years from now. Both think the lobbying is a delay, not a destination.

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