Crypto market analyst EGRAG CRYPTO believes the banking industry’s opposition to stablecoins is driven less by concerns about risk and more by fears that these digital assets could disrupt one of banks’ most profitable business models.
His comments come as lawmakers in the United States continue debating cryptocurrency regulations and stablecoin legislation, while banks and digital asset advocates remain divided over whether yield generating stablecoins could draw significant funds away from traditional bank deposits.
Why Stablecoins Challenge the Banking Model
In a recent analysis, EGRAG argued that the real issue is not regulation but the potential impact stablecoins could have on how banks generate revenue.
He explained that when customers place money in a bank account, they are effectively providing the bank with an unsecured loan. Banks then use those deposits to issue loans and other forms of credit at much higher interest rates while paying depositors only a small fraction in return.
According to the analyst, this difference between what banks earn on loans and what they pay depositors forms the foundation of their business model.
Stablecoins, however, are beginning to challenge that system by separating functions that banks have traditionally combined. These include the safekeeping of funds, payment settlement, and the ability to earn returns on capital.
A stablecoin backed by US Treasury securities can allow users to hold dollar denominated assets, transfer value quickly, and potentially earn yields linked to government debt, all without relying on a traditional bank account.
EGRAG argues that if consumers can earn returns of 4% to 6% while maintaining direct control of their funds, many may see less value in keeping money in low yielding bank deposits. Such a shift could weaken banks’ funding sources and reduce their influence within the financial system.
Concerns Supported by Industry Estimates
While EGRAG’s comments are strongly worded, similar concerns have been raised by financial institutions and analysts.
Earlier this year, analysts at Standard Chartered estimated that US banks could lose approximately $500 billion in deposits to stablecoins by the end of 2028, with regional banks considered particularly vulnerable.
According to Geoff Kendrick, major stablecoin issuers such as Tether and Circle primarily hold reserves in US Treasury securities rather than traditional bank deposits. As a result, much of the capital supporting stablecoins does not flow back into the banking system.
Legislative Battle Intensifies
The debate became more visible during discussions surrounding the CLARITY Act in the US Senate.
Members of the American Bankers Association reportedly sent thousands of letters to Senate offices in a short period, focusing heavily on proposed rules involving stablecoin yields.
During those discussions, Bernie Moreno accused banks of attempting to block stablecoin innovations that could allow consumers to earn higher returns on their own money. He argued that traditional financial institutions were primarily seeking to protect low interest deposit models.
EGRAG interpreted the banking sector’s lobbying efforts as evidence that stablecoins represent a meaningful competitive challenge. In his view, if stablecoins posed little threat, there would be far less resistance from banks and policymakers.
Institutional Adoption Continues to Grow
Interest in stablecoins is not limited to retail users. A survey released by Ripple found that 74% of finance executives view stablecoins as valuable tools for improving treasury management and unlocking working capital efficiencies.
Meanwhile, the stablecoin market continues to expand rapidly. Recent industry data places the sector’s total market value at roughly $320 billion. USDT remains the dominant stablecoin with a market capitalization of around $188 billion, while USDC follows with approximately $76 billion.
As regulatory discussions continue, the debate over stablecoins is increasingly becoming a broader conversation about the future of payments, banking, and who ultimately controls access to financial services.#crypto#cryptonews https://coinsignals.net https://t.me/coinsignalpublic
