Standard Chartered published a report warning that rapid growth in stablecoins could significantly reduce traditional bank deposits over the next few years.
Stablecoins currently exceed $300B in market capitalization. The bank estimates that if supply grows toward $2T by 2028, up to $500B could be pulled out of developed market banks, with regional banks expected to be the most affected due to lower net interest income.
The report notes that major issuers such as Tether and Circle hold only a limited portion of reserves in banks, while a large share of stablecoin demand comes from emerging markets. This suggests capital flows are largely one directional, moving from fiat into stablecoins rather than returning to the traditional banking system.
This shift is also reflected in user behavior. In the EU, many users now off ramp USDT and USDC via crypto fiat platforms offering IBANs and SEPA Instant access, including services like Keytom, Quppy, Trastra, and similar apps, instead of relying on direct bank wires.
As regulatory clarity around stablecoins continues to evolve, infrastructure for converting between stablecoins and fiat is becoming increasingly important.
