Stablecoins Could Drain $500B from Bank Deposits-Find Out Why

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Well, now, if you’ve a mind to keep your money where a feller can kick back and count the interest, you’re about to hear a yarn that would make even a riverboat gambler prick up his ears. Some big folks at Standard Chartered reckon stablecoins might steal away as much as $500 billion in good old bank deposits by the year 2028, and that’s not a small rumor to drop into a teacup.

Stablecoins Could Pressure Bank Earnings And Deposits

Reuters shared the tale on a Tuesday, saying the banks most in danger are the regional ones-the kind where folks keep a fair share of their cash and their opinions. Stablecoins are getting comfy in the roles banks used to fill-payments and other core services-like a new mule learning the same trick rodeo after rodeo.

Geoff Kendrick, the head of digital assets research at Standard Chartered, warns that the smaller and mid‑sized lenders may feel the sting the sharpest as stablecoins step into duties once thought to be bank bread and butter.

The analysis fences itself around banks’ net interest margins-the spread between what they earn on loans and what they pay to depositors. If deposits slip away, that income might find itself out of work, looking for a new breakfast table.

As deposits mosey on out the door, earnings could be strained, especially for those institutions that lean heavily on consumer and commercial deposits for their funding. Kendrick says the whole business of banking could drift toward stablecoin‑based systems, like a river turning toward a new bend.

Banks And Crypto Firms Clash

While the GENIUS Act-presently keeping issuers from paying interest on stablecoins-stirs concern, bankers worry a loophole could let third parties, including crypto exchanges, hand out returns on stablecoin holdings. A new bit of trouble for a quarrel that’s been going on longer than a cat’s whiskers.

In recent months, banking groups have argued that this “stablecoin loophole” could spark competition for deposits, potentially driving outflows and nudging stability out of reach. They’ve pressed for changes to the bill on this very matter.

Crypto companies push back, saying blocking interest payments tied to stablecoins would throttle competition and innovation, potentially slowing the long-awaited march of another key piece of legislation for the crypto market.

Earlier this month, a Senate Banking Committee hearing on crypto market structure was postponed, partly because lawmakers couldn’t agree on how to address banks’ concerns about deposit flight.

Kendrick notes that the ultimate scale of losses will hinge on how issuers manage their reserves. If issuers keep a healthy share of backing assets in the U.S. banking system, the blow might be softened. The two heavyweight issuers-Tether (USDT) and Circle (USDC)-keep most of their reserves in U.S. Treasuries rather than in bank deposits, which means not much of that money gets recycled back into the banking system.

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2026-01-28 07:11