Stablecoins are increasingly being viewed as a direct competitor to traditional bank deposits, and new forecasts suggest the impact on the US banking system could be significant over the coming years.
Key Takeaways
Up to $500B in US bank deposits at risk by 2028.
Stablecoins projected to reach ~$2T by decade-end.
Banks oppose yield-bearing stablecoins in the CLARITY Act.
According to estimates from Standard Chartered, stablecoins could drain up to $500 billion in deposits from US banks by 2028. At the same time, the broader stablecoin market is projected to expand toward roughly $2 trillion by the end of the decade, with around one third of that growth coming from developed markets such as the United States.
Stablecoins move beyond crypto trading
The shift matters because stablecoins are no longer used only as plumbing for crypto markets. They are increasingly behaving like digital cash alternatives, offering instant settlement, global transferability, and in some cases the potential for yield. That puts them in direct competition with bank deposits, which remain the backbone of the traditional banking funding model.
As stablecoins gain traction as a store of value rather than just a transaction rail, they begin to challenge banks on their most important advantage: low-cost, sticky deposits that support lending and net interest margins.
US regional banks appear to be the most exposed to this shift. Their business models rely heavily on deposit-funded net interest income, making them more vulnerable if customers reallocate cash into stablecoins. Data comparing deposit sensitivity across banks shows regional lenders clustering at the higher-risk end, while investment banks and brokerages appear far less exposed.
Diversified banks are better positioned, but not immune
Large, diversified US banks are better insulated thanks to broader revenue streams across trading, asset management, and investment banking. Even so, they are not immune. A sustained migration of deposits into stablecoins would still create structural pressure on margins over time, especially if the trend accelerates rather than stabilizes.
Another key difference lies in how stablecoin issuers manage reserves. Major players such as Tether and Circle largely park backing assets in short-term government securities rather than recycling capital back into commercial bank deposits. This limits the indirect funding support banks typically receive from payment activity, weakening the traditional deposit loop.
Banks push back against yield-bearing stablecoins
The growing threat has turned stablecoins into a regulatory flashpoint in Washington. US banks are actively opposing proposals under the CLARITY Act that would allow yield-bearing stablecoins. Banking groups argue that permitting stablecoin issuers to offer yield would accelerate deposit outflows, undermine bank funding stability, and increase systemic risk.
Crypto firms and stablecoin issuers counter that banning yield would be anti-competitive and slow innovation, particularly as consumers look for more efficient and flexible ways to hold and move money.
As lawmakers debate the final shape of the CLARITY Act, the outcome could prove decisive. If yield-bearing stablecoins are approved and adoption continues to scale, the shift away from traditional bank deposits may become structural rather than cyclical, reshaping the US financial system over the next decade.
