WILMINGTON, Del.–With the banking industry often stating that stablecoins threaten traditional financial stability, Coinbase has published what it is calling a “comprehensive defense” that argues the “math doesn’t add up.”
Coinbase said its analysis shows the “deposit erosion” narrative is a “myth” designed to protect banks’ $187 billion annual payment processing monopoly.
The research, titled “Beyond the Deposit Debate,” challenges Treasury estimates of $6 trillion in potential deposit outflows from yield-bearing stablecoins.
Coinbase released its report at a time it said five major U.S. banking trade organizations are lobbying Congress to tighten GENIUS Act regulations and warning that stablecoin platforms offering competitive yields could trigger mass deposit flight similar to the 1980s money market fund crisis.
Coinbase argues, however, that banks park $3.3 trillion in Federal Reserve reserves, earning $176 billion risk-free annually rather than extending additional loans, contradicting claims of deposit shortages.
‘Strengthening the Dollar’
The company contends that most stablecoin activity occurs internationally, strengthening the U.S. dollar’s global role without significantly affecting domestic deposits.
According to data published by Crypto News, the stablecoin market has grown from $4 billion in 2020 to over $285 billion today, and it is projected to hit $1 trillion in payments by 2030, potentially comprising 10% of the U.S. money supply.
