NEW YORK — U.S. dollar-backed crypto tokens known as stablecoins could siphon about $500 billion in deposits from U.S. banks by the end of 2028, according to a new analysis from Standard Chartered, a projection that could sharpen tensions between banks and crypto firms as Congress debates rules for the digital asset sector.
Regional banks would be most exposed to potential deposit losses, said Geoff Kendrick, Standard Chartered’s global head of digital assets research.
The company’s analysis focuses on banks’ net interest margin income — the spread between what lenders earn on loans and what they pay on deposits — and assesses how that income could be pressured as payments and other core banking functions migrate toward stablecoins.
“U.S. banks face a threat as payment networks and other core banking activities shift to stablecoins,” Kendrick said in a research note.
About Stablecoins
Stablecoins are digital tokens typically pegged to the U.S. dollar and designed to maintain a stable value. While proponents say they can be used to send and receive payments almost instantly, they are most commonly used as a bridge for trading in and out of other cryptocurrencies, such as bitcoin.
As the CU Daily reported, President Donald Trump last year signed legislation establishing a federal regulatory framework for stablecoins, a move widely expected to accelerate their adoption. The law bars stablecoin issuers from paying interest on the tokens but, according to banks, leaves open a loophole that could allow third parties — such as crypto exchanges — to offer yield, creating new competition for deposits.
Bank, CU Groups Share Warning
As the CU Daily has also reported, both credit union and bank trade groups have warned that unless Congress closes that loophole, banks could face an exodus of deposits, which are the primary source of funding for most lenders and a key pillar of financial stability.
Crypto companies have pushed back, arguing that prohibiting interest payments would be anti-competitive and stifle innovation.
A Senate Banking Committee hearing to debate and vote on additional crypto legislation was postponed earlier this month, in part because of disagreements over how to address banks’ concerns.
Issue is Where Reserves are Held
Kendrick said in his research note the scale of potential deposit losses depends in part on where stablecoin issuers hold their reserves. If a significant share of those reserves remained within the U.S. banking system, the impact on deposits would be smaller.
However, the two largest stablecoin issuers, Tether and Circle, hold most of their reserves in U.S. Treasuries, meaning “very little re-depositing is happening,” he said.
