🏦💸 $500B Could Leave U.S. Banks for Stablecoins A Financial Power Shift in Motion
A major warning shot just came from Standard Chartered: up to $500 billion in deposits could migrate from U.S. banks into stablecoins by 2028. That’s not a niche crypto headline that’s a structural shift in how money might be stored and moved. 🌍
Geoffrey Kendrick, the bank’s Global Head of Digital Assets Research, believes regional banks face the biggest risk. Why? Their business model leans heavily on net interest margin (NIM) the spread between what they earn on loans and what they pay depositors. For many regional lenders, NIM drives over 60% of revenue. If deposits leave, that margin shrinks. Fast. 📉
Stablecoins are becoming more than trading tools. They’re evolving into digital cash alternatives that can move instantly, settle globally, and potentially even earn yield depending on future regulation. That’s where the debate around the CLARITY Act becomes crucial. If third-party providers are allowed to offer yield on stablecoins, the incentive to hold funds outside traditional banks could grow significantly. ⚖️
Still, it’s not all one-way traffic. Kendrick notes that impact depends partly on where stablecoin issuers hold reserves. If funds remain within the banking system, damage could be limited. But major issuers like Tether and Circle largely hold reserves in U.S. Treasuries, not bank deposits — meaning liquidity may bypass banks entirely. 🏛️
Interestingly, Circle’s CEO argues stablecoins complement banks rather than compete with them. But numbers this large suggest at least some competition is unavoidable.
This isn’t about crypto replacing banks overnight. It’s about money slowly gaining a digital escape route and banks may need to adapt faster than expected. 🚀
