Fears that crypto stablecoins could undermine U.S. banks by siphoning off deposits are misplaced and overlook their practical utility, according to Coinbase researchers.
“The ‘stablecoins will destroy bank lending’ narrative ignores reality,” Coinbase’s chief policy officer Faryar Shirzad said on Wednesday.
“Most stablecoin demand comes from outside the US, expanding dollar dominance globally, not competing with your local bank.”
Shirzad shared a market note arguing that concerns over stablecoins’ impact on bank deposits and lending “echo familiar worries from earlier innovations like money market funds,” but fail to recognize “how and where stablecoins are actually used.”
U.S. banking groups have warned that yield-bearing stablecoins could compete with traditional savings accounts and prompt deposit outflows, urging Congress to impose tighter restrictions on such products.
Stablecoin demand is global, not U.S.-centric
According to Coinbase, most stablecoin demand originates from international users seeking dollar exposure, rather than from U.S. consumers. In emerging markets, U.S. dollar stablecoins are used to hedge against local currency depreciation and serve as a practical gateway to dollar access for underbanked populations.
The note further highlighted that about two-thirds of all stablecoin transfers occur on decentralized finance (DeFi) or blockchain platforms. “In that sense, they serve as the transactional plumbing of a new financial layer — one that runs parallel to, but largely outside, the traditional banking system,” Coinbase wrote.
Community Banks Won’t Collapse, Says Coinbase
Coinbase dismissed concerns that widespread stablecoin adoption could severely impact community banks, arguing that the typical stablecoin user differs fundamentally from the average community bank customer.
“Community banks and stablecoin holders barely overlap,” said Faryar Shirzad, Coinbase’s chief policy officer, adding that rather than being threatened, banks could enhance their services by integrating stablecoin technology.
The company also cautioned against exaggerated forecasts predicting trillions of dollars flowing into stablecoins over the next decade.
“Even if global stablecoin circulation reached $5 trillion, most of that value would remain foreign-held or embedded within digital settlement systems — not diverted from U.S. checking or savings accounts,” the report said.
Coinbase pointed out that U.S. commercial bank deposits exceed $18 trillion, concluding that the impact of stablecoins on domestic deposits would be marginal, while their adoption would amplify the global reach of the U.S. dollar.
Meanwhile, several major banks and financial institutions have started launching or exploring stablecoin services following the passage of the GENIUS Act earlier this year, which established a regulatory framework for stablecoin providers in the United States.
