Stablecoins are moving from crypto trading to everyday payments, a shift Standard Chartered estimates could siphon as much as $500 billion from bank deposits by the end of 2028. That potential exodus represents a structural risk to banks that rely on consumer deposits to fund lending, particularly smaller regional banks with thinner net interest margins. Notably, the threat to deposits comes from payment use of stablecoins rather than trading activity. As stablecoins are spent on real goods, they become a direct competitor with traditional bank deposits.
The incentive to hold yields up to 3.5% via platforms like Coinbase makes leaving the banking system more attractive. Even as stablecoin transaction volumes surged to $33 trillion in 2025, trading remains volatile and cyclical. The growing utility of stablecoins for day-to-day expenses—rent and groceries—and the emergence of Visa- and Mastercard-branded stablecoin cards show that these assets are being spent, not merely held. Looking ahead, analysts project the stablecoin market could reach as much as $10 trillion within five to ten years, driven by instant settlement and on-chain treasury capabilities.
Banks face an embedded risk as stablecoins flow into payments; issuers hold reserves in Treasuries instead of redepositing funds, and regional banks could see their net interest margins squeezed. Payments are the wedge that could embed stablecoins into corporate finance, treasury management, and settlement infrastructure, reducing the banks’ monopoly on liquidity. Payments are the crack in a foundation that will slowly crumble. Banks are worried and rightfully so.
Leave a Reply