Crypto Apps Pay Ten Times What Your Savings Account Does, and the Banks Are Suing

The average U.S. savings account paid 0.37% in September. Coinbase pays its members 3.75% on USDC, and starting the last week of October a USDC balance comes to Samsung Wallet in the U.S.

Summary: The average American savings account paid 0.37 percent in September, according to the FDIC. Coinbase pays members of its subscription program 3.75 percent on USDC, a digital dollar backed by cash and Treasury bills, and starting the last week of October a USDC balance comes to Samsung Wallet in the U.S.

A new Bank for International Settlements paper finds people treat stablecoins as digital dollars and partial substitutes for a bank account. Community banks say every dollar that leaves the traditional banking system represents the potential loss of a local loan.

On October 2 their trade group sued the federal regulator that has been letting crypto companies become banks.

Thesis: Your bank pays you almost nothing on savings because it's betting you won't bother to leave. For the first time, the alternative is showing up inside apps people already use, and it can pay something close to what the government pays on debt like Treasury bills.

The small banks are right that some of your deposit funds a neighbor's loan. They're overstating how much is at risk, and the fight they've taken to court is about who gets to call itself a bank.

Next week your phone gets a dollar that doesn't live at a bank

Sometime in the last week of October, a Samsung Galaxy owner in the U.S. will open Samsung Wallet, the app that already holds their credit cards and boarding passes, and top up a dollar balance. What lands is USDC, a stablecoin: a token worth one dollar, issued by Circle and backed by cash and short-term Treasury bills.

Coinbase, which announced the deal on October 8, will hold the tokens on behalf of a licensed custody partner. The announcement doesn't mention interest, rewards or FDIC insurance. It's pitched as convenience, dollars in your phone and ready to move.

A week after that announcement, Visa said businesses can now fund cross-border payouts with USDC through Visa Direct, the system companies use to push money to workers, sellers, and contractors.

Circle has announced a similar plug-in for SAP Pay, part of the software many large companies use to run their books. Visa's partner on the launch, Inyo, says payouts reach more than 180 countries and run "around the clock," which means a freelancer abroad can get paid on a Saturday.

In each of these new products the coin is just a dollar, sitting somewhere other than a bank, inside a product people already use.

And a dollar that sits outside a bank can do something a savings account usually doesn't do these days. It can earn real money.

Your bank pays you 0.37 percent because it can

In September the national average rate on a savings account was 0.37 percent, by the FDIC's count. On $10,000 that's $37 a year. The government was paying about 4.24 percent on three-month Treasury bills in late September, as this newsletter noted three weeks ago.

That gap is the oldest business model in banking. A bank borrows from you on demand, lends for years, and keeps the difference. It can pay you very little because most people never move their money. Switching banks means new account numbers, new direct deposits, and an afternoon on hold or a trip to the bank.

A stablecoin issuer holds the same Treasury bills the government is paying 4 percent on. The GENIUS Act, the federal stablecoin law, bars the issuer from paying holders any interest. It says nothing about the apps that hand the coins out.

So the apps pay instead. Coinbase offers "unlimited 3.75% rewards on USDC" to members of Coinbase One, a subscription that starts at $4.99 a month.

Circle, in turn, shares its reserve income with the firms that distribute its coin: in the second quarter it earned $667.7 million on reserves and spent $410.4 million on distribution and transaction costs.

The Clarity Act's Section 10404 would have reached the exchanges and wallets paying rewards, and it died with the rest of the bill in a 49-50 Senate vote on September 15, which left those rewards legal by omission. We covered more on this in a recent issue:

People do move when the gap is big enough

Banks have always counted on savers being loyal.

In a working paper published October 13, economists Rashad Ahmed and Iñaki Aldasoro tracked weekly U.S. data from 2019 to mid-2025, a stretch in which the stablecoin market grew from under $5 billion to more than $220 billion. Their question was simple: when banks raise what they pay on deposits, does stablecoin growth slow?

It does. "Deposit rate increases predict slower stablecoin growth," the paper finds, and the effect held up when the authors checked it against crypto tokens that aren't dollar substitutes. The pull was strongest on USDC, which the authors tie to its closer links with American savers.

So stablecoins and bank deposits are partial substitutes. Some of the people holding digital dollars are comparing them to a savings account, and they notice when the bank finally pays more.

The authors are careful about what that doesn't prove. Their analysis "does not establish that stablecoin growth necessarily reduces aggregate bank deposits or lending," they write. Money that moves into USDC ends up in Treasury bills and in bank accounts the issuer holds, so some of it comes back around.

The finding is narrower than a run on the banks. It says the rate on your savings account now has competition.

Your deposit is somebody's farm loan

That's where the community banks come in, and their argument deserves a fair hearing.

A big bank funds itself a hundred ways: bond markets, trading desks, deposits from corporations. A small-town bank mostly funds itself with your checking and savings accounts, and lends that money nearby. Community banks, those with under $10 billion in assets, held $162.6 billion in farm loans at the end of March, according to the St. Louis Fed.

"Every deposit represents a home loan, a small business loan, or an agricultural loan," eight banking and credit union groups, the ICBA among them, wrote to the Senate in January. They warned that "$6.6 trillion in bank deposits could be at risk," citing the Treasury.

That number is worth tracing. It comes from a slide in an April 2025 presentation to the Treasury Borrowing Advisory Committee, a panel of bond dealers and investors that advises the Treasury on its debt. On the slide, about $6.6 trillion is simply the total of transactional deposits in the country, the money sitting in checking accounts. It's a count of every checking account in America, which is a different thing from an estimate of what will leave.

The White House's own economists ran the numbers in April. The Council of Economic Advisers modeled what the ban on stablecoin interest actually protects and concluded it "would do very little to protect bank lending": about $2.1 billion of loans, or 0.02 percent. Only about $500 million of that would be community bank lending.

The banks do have a sharper point than their headline number, and it's about where the money goes once it leaves. Circle says most of USDC's reserves sit in a government money market fund managed by BlackRock, and the rest is held in cash "mostly among a handful of the world's largest banks."

So a dollar that leaves a savings account in a farm town for USDC doesn't vanish from the banking system. It turns up as Treasury bills and as a deposit at a giant bank in New York. National deposits can hold steady while the small bank that made the crop loan still loses the dollar. That's why the BIS can say lending may not shrink overall and a community banker can say his lending will, and both can be right.

Its worst case is much bigger, $129 billion of community bank loans, but it needs the stablecoin market to grow to roughly six times its current share of deposits, issuers to hold their reserves as idle cash, and the Fed to abandon how it runs monetary policy.

Your deposit really is somebody's farm loan. The banks are claiming far more of those loans are in danger than the evidence shows.

So the banks went to court over who gets to be a bank

If you can't stop a competitor from paying more, you can try to stop it from looking as safe as you. That's where the fight went this month.

On October 2 the Independent Community Bankers of America sued the Office of the Comptroller of the Currency, the federal agency that licenses national banks.

The target is a quiet change that has let crypto companies become "national trust banks," federally chartered institutions that hold assets for customers and don't take deposits or make loans. The OCC has approved 21 trust banks under this administration, at least 13 of them crypto companies, according to the complaint. Coinbase got conditional approval in April. Circle won final approval for its trust bank in July.

The legal argument is technical (the community banks say the law allows a trust bank only if it acts as a trustee, and these firms mostly just hold coins). The consumer argument is plain, and it's the one that matters for your phone.

"American consumers reasonably expect a federally chartered bank to carry federal protections," said Rebeca Romero Rainey, the ICBA's chief executive. "Digital assets held at a crypto firm operating under a national trust charter do not carry those important safeguards."

She has a point. A crypto company with "National Association" in its name sounds like your bank, and it carries no FDIC insurance, because it holds no deposits to insure. USDC is backed by cash and Treasuries, and Circle publishes monthly reports on its reserves, which is a real protection. It's a different protection from the government guarantee most people picture when they hear the word "bank."

Since 2024, when the Supreme Court ended the rule that judges defer to agencies on unclear laws, the judge will read the statute fresh. The OCC told American Banker it doesn't comment on ongoing litigation.

The honest case against this read

The strongest objection is that savers have had better options for years and mostly ignored them. Online banks and money market funds have paid several times the national average since rates rose in 2022, and a 0.37 percent average suggests plenty of money never moved.

If inertia beat a high-yield savings account, it may beat a digital dollar in a phone too. I think the difference is distribution: the alternative now arrives inside an app you already open, with no new account to set up. That's a bet, and Samsung's launch is announced, not live.

The second is that I've leaned on the White House's numbers, and the White House has an interest here. The administration championed the GENIUS Act and wants stablecoins to grow, and the CEA's model is its own. The BIS paper, written by central bank economists with no stake in American crypto policy, supports the direction of the finding without measuring the damage to lending at all.

The third is the community banks' best point, which my framing undersells. Averages hide where the losses would land. A 0.02 percent dip in national lending is nothing. The same money leaving a single farm-town bank, the one that holds the county's crop loans, is the whole story for that county.

What this means for you

If you keep money in savings, check your rate. The national average is 0.37 percent, and the stablecoin fight is some of the first real pressure banks have felt to raise it.

If you hold dollars in a crypto app, know three things: who issues the coin, who holds it for you, and that neither one is the FDIC.

If you work at a community bank, the threat is the slow loss of the customers who notice the rate, long before any $6.6 trillion run. The cheapest defense is paying them a little more before they find out how easy it is to leave.

Watch the OCC's final GENIUS Act rule, which Comptroller Jonathan Gould has promised by November and which decides how far the interest ban reaches into the apps paying rewards.

Also watch the Samsung launch, and whether rewards ever show up next to that balance. And watch the court, where a judge will decide whether the companies holding your digital dollars get to call themselves banks.

For decades your bank's best product was your reluctance to leave. That's what it's really defending.

Sources

[1] Federal Deposit Insurance Corporation. National Rate: Savings, September 2026, 0.37 percent, via Federal Reserve Bank of St. Louis FRED series SNDR. https://fred.stlouisfed.org/series/SNDR

[2] Coinbase. "Coinbase and Samsung Bring USDC to Samsung Wallet," October 8, 2026. Launch "starting the last week of Oct. 2026 in the U.S. market," Coinbase subcustody. https://www.coinbase.com/blog/coinbase-and-samsung-bring-usdc-to-samsung-wallet

[3] Visa. "Visa Direct Launches Stablecoin-Powered Money Movement as Pilots Move to Production," October 15, 2026. https://usa.visa.com/about-visa/newsroom/press-releases.releaseId.22851.html

[4] Circle and Tereina. "Tereina, an SAP-backed company, and Circle Bring USDC and EURC into Enterprise Workflows," October 7, 2026. https://www.circle.com/pressroom/tereina-an-sap-backed-company-and-circle-bring-usdc-and-eurc-into-enterprise-workflows-starting-with-the-sap-ecosystem-behind-84-of-global-commerce

[5] Coinbase. USDC product page, accessed October 18, 2026. "Earn unlimited 3.75% rewards on USDC exclusively with Coinbase One," Coinbase One from $4.99 a month, rate subject to change and availability subject to location. https://www.coinbase.com/usdc

[6] Rashad Ahmed and Iñaki Aldasoro. "Are stablecoins and bank deposits substitutes?" BIS Working Papers No 1382, October 13, 2026. Market growth (p. 6), main estimates (pp. 8 to 13), lending caveat. https://www.bis.org/publications/working-paper-1382-are-stablecoins-and-bank-deposits-substitutes

[7] Federal Reserve Bank of St. Louis. "Banking Analytics: Agricultural Lending by Community Banks Remained Strong in Q1," July 2026. https://www.stlouisfed.org/on-the-economy/2026/jul/banking-analytics-agricultural-lending-community-banks-remained-strong-q1

[8] American Bankers Association and seven other associations including ICBA. Joint letter to the U.S. Senate on stablecoin yield, January 12, 2026. https://www.aba.com/advocacy/policy-analysis/Joint-Trade-Association-Letter-on-Stablecoin-Loophole

[9] Treasury Borrowing Advisory Committee. "Digital Money," TBAC presentation, April 30, 2025, slides 10 and 13 (transactional deposits of about $6.6 trillion, FDIC call reports as of 4Q24). https://home.treasury.gov/system/files/221/TBACCharge2Q22025.pdf

[10] The White House, Council of Economic Advisers. "Effects of Stablecoin Yield Prohibition on Bank Lending," April 8, 2026. https://www.whitehouse.gov/research/2026/04/effects-of-stablecoin-yield-prohibition-on-bank-lending/

[11] Independent Community Bankers of America v. Office of the Comptroller of the Currency, et al., No. 1:26-cv-03441 (D.D.C.), complaint filed October 2, 2026. 21 trust banks approved, at least 13 crypto (¶¶ 5, 7). https://www.icba.org/documents/d/asset-library-45247/icba-v-occ-as-filed-complaint-c

[12] Independent Community Bankers of America. "ICBA Sues OCC Over National Trust Bank Charters for Crypto Firms," October 2, 2026. https://www.icba.org/w/occ-release-oct-2026

[13] Cointelegraph. Coinbase conditional approval for a national trust charter, April 2, 2026. https://regional-front.cointelegraph.com/news/coinbase-conditional-approval-national-trust-charter-occ

[14] The Block. "Stablecoin firm Circle wins final OCC approval to open national trust bank," July 10, 2026. https://theblock.co/post/407876/stablecoin-firm-circle-wins-final-occ-approval-to-open-national-trust-bank

[15] American Banker. "Exclusive: ICBA sues OCC over trust charters," October 2, 2026. https://www.americanbanker.com/news/exclusive-icba-sues-occ-over-trust-charters

[16] Office of the Comptroller of the Currency. Comptroller Gould at the Wyoming Blockchain Symposium, NR 2026-69, August 19, 2026. GENIUS final rule "by November." https://www.occ.gov/news-issuances/news-releases/2026/nr-occ-2026-69.html