Standard Chartered published an analysis on Tuesday indicating that U.S. dollar-pegged stablecoins could siphon approximately $500 billion in deposits from U.S. banks by the close of 2028. The bank's projection has renewed focus on the tension between traditional banking institutions and crypto firms as lawmakers consider regulatory rules for the digital-asset space.
Geoff Kendrick, global head of digital assets research at Standard Chartered, said regional U.S. banks would be the most vulnerable to deposit losses tied to growing stablecoin adoption. The bank's assessment uses lenders' net interest margin income - the spread between the return banks earn on loans and the interest paid on deposits - as a basis for estimating exposure.
Kendrick warned that the rise of stablecoins could shift payment networks and other core banking functions away from conventional deposit systems. "U.S. banks ... face a threat as payment networks and other core banking activities shift to stablecoins," he wrote in the research note.
Legislative action has already set the stage for broader use of dollar-backed tokens. Last year, the U.S. president signed a bill establishing a federal regulatory framework for stablecoins, a move broadly expected to encourage greater general usage of these tokens for payments and settlements.
The statute bars stablecoin issuers from directly paying interest on cryptocurrencies, but it left open a potential loophole. That gap could permit third parties, such as crypto exchanges, to provide yield on tokens, creating a new competitive channel for deposit-like assets that might draw funds away from banks.
Banking industry lobbyists have cautioned that unless Congress addresses that legislative gap, banks could experience an outflow of deposits - the primary funding source for many lenders - potentially posing risks to financial stability. Crypto firms counter that preventing them from offering yields on stablecoins would amount to anti-competitive treatment.
Lawmakers have not resolved the issue. A planned Senate Banking Committee hearing to debate and vote on crypto legislation was postponed earlier this month, with disagreement among policymakers over how best to respond to banks' concerns cited as a factor in the delay.
Kendrick noted that the amount of deposits at risk depends materially on the custody choices of stablecoin issuers. If issuers maintain a large portion of their reserves within the banking system, any migration of funds could be partly offset by redepositing. However, he observed that the two largest stablecoin issuers, Tether and Circle, hold most of their reserves in U.S. Treasuries, "so very little re-depositing is happening."
The analysis underscores a policy and market debate over how stablecoins will interact with traditional banking - whether they will function mainly as payment rails and trading utilities or evolve into instruments that compete directly with bank deposits.