Coinbase has pushed back against claims that stablecoins pose a threat to the U.S. banking system, dismissing the notion of “deposit erosion” as a myth.
In a blog post published Tuesday, the crypto exchange argued that concerns about stablecoins draining bank deposits are misplaced. Citing “recent analysis,” Coinbase said there is no evidence that stablecoin adoption contributes to deposit outflows at community banks.
“Stablecoins don’t threaten lending — they provide a competitive alternative to banks’ $187 billion annual swipe-fee windfall,” the company wrote, emphasizing that stablecoins function as payment tools, not savings vehicles. “When someone buys stablecoins to pay an overseas supplier, they’re not pulling from their savings — they’re choosing a faster, cheaper way to transact,” it added.
Coinbase also disputed figures from a U.S. Treasury Borrowing Advisory Committee report, which warned of a potential $6 trillion deposit flight despite only predicting a $2 trillion stablecoin market by 2028. “The math doesn’t add up,” the exchange said.
Stablecoin activity is mostly international
In an accompanying paper, Coinbase highlighted that the bulk of stablecoin transactions take place outside the U.S., particularly in markets with weaker financial infrastructure. Referencing IMF data, it noted that more than $1 trillion of the $2 trillion in stablecoin transactions recorded in 2024 occurred internationally, especially in Asia, Latin America, and Africa.
Because nearly all major stablecoins are pegged to the U.S. dollar, Coinbase argued, their widespread use abroad strengthens dollar dominance. Far from undermining U.S. bank deposits, stablecoins expand the dollar’s global influence without restricting domestic credit availability.
The exchange also pointed out that correlations between bank stocks and crypto firms such as Coinbase and Circle turned positive after the passage of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), suggesting that banks and stablecoins can thrive together.
Banks Must Step Up Their Game
Bitwise CIO Matt Hougan recently criticized U.S. banks for complaining about competition from stablecoins instead of improving their own products — particularly deposit interest rates. He argued that banks have long underpaid depositors and are now panicking as stablecoins present more attractive alternatives.
In August, major U.S. banking groups led by the Bank Policy Institute urged Congress to close what they called a loophole in the GENIUS Act, claiming it could let stablecoin issuers indirectly offer yields through crypto exchanges or affiliates.
In response, the Crypto Council for Innovation and the Blockchain Association urged lawmakers to reject the proposal, warning that such changes would give traditional banks an unfair advantage while suppressing innovation.
