Standard Chartered warns that stablecoins could drain up to $500 billion from bank deposits in developed markets by 2028. U.S. banks are increasingly at risk as stablecoin adoption grows, with total circulation up roughly 40% over the past year to over $300 billion.
Long-Term Funding Risks
Geoff Kendrick, head of crypto research at Standard Chartered, estimates that stablecoins could remove as much as $500 billion from banks in industrialized nations by 2028, equal to about one-third of the U.S. stablecoin market cap. Growth may accelerate if the Clarity Act, regulating digital assets, passes.
U.S. banks face additional pressure as payment systems and core banking services shift toward stablecoins. Yield rewards on stablecoins, like Coinbase’s 3.5% on USDC, are a major point of contention with bank lobbying groups.
Regional Banks Most Exposed
Using net interest margin as a measure of vulnerability, Kendrick identified regional U.S. banks as the most at risk. Huntington Bancshares, M&T Bank, Truist Financial, and Citizens Financial Group top the list. Smaller banks are more sensitive due to reliance on traditional lending.
Short-term indicators remain supportive, with regional banking stocks rising nearly 6% in January and potential interest rate cuts and stimulus aiding loan growth. However, Kendrick expects the shift toward stablecoins to continue long term. Tether and Circle hold only a small fraction of reserves in bank deposits, showing little redepositing, and individual bank exposure will depend on their response.
