A new research report from Standard Chartered warns that the rise of stablecoins poses a structural threat to U.S. banks. The bank estimates that by the end of 2028, up to $500 billion in deposits could shift from American banks into stablecoins, challenging traditional funding models and profitability.
$2 Trillion Stablecoin Market, One-Third Impact on US
Analysts at Standard Chartered note that the $500 billion figure represents roughly one-third of the expected global stablecoin market size of $2 trillion. It also equals half of the previously estimated $1 trillion in emerging market deposits that could move into dollar-pegged stablecoins. Geoffrey Kendrick, head of global digital assets research at the bank, points out that payment, clearing and other core banking functions are migrating to blockchain-based solutions. Stablecoins are no longer just trading tools — they directly compete with bank deposits.
Regulatory Gridlock Could Backfire, Boosting Adoption
The U.S. Clarity Act for digital assets has stalled, leaving the market in high uncertainty. According to Kendrick, the debate has turned into a direct clash between big banks and the crypto industry. Coinbase withdrew support for a draft that might weaken stablecoin incentives; meanwhile, Bank of America's CEO warned that if stablecoins are allowed to pay interest, they could drain up to $6 trillion in deposits. Standard Chartered argues that once a regulatory framework is finalized, the removal of uncertainty may actually accelerate stablecoin usage and penetration.
Regional Banks Hit Hardest, Investment Banks Least
To gauge risk distribution, Standard Chartered used net interest income as a share of total revenue as the key metric. The analysis shows that U.S. regional banks — heavily reliant on deposits for lending — face the highest exposure. Larger, diversified universal banks carry moderate risk, while investment banks and broker-dealers, which depend less on deposit-based income, are the least affected.
Structural Issues: Funds Leave, Hard to Return
The report also highlights a structural flaw: Tether and Circle, the two largest stablecoin issuers, park only a small portion of their reserves in the banking system. This means that even when funds flow into stablecoins, they rarely cycle back to traditional banks. Standard Chartered estimates about two-thirds of current stablecoin demand comes from emerging markets, the rest from developed ones — a key input for calculating deposit loss in the U.S. and other advanced economies.
Kendrick stresses that the impact is not uniform. Banks' responses — whether adjusting funding sources or embracing tokenization and blockchain finance — will be decisive. Beyond deposits, the accelerating tokenization of real-world assets also poses long-term risks to non-interest income. Stablecoins have evolved from a niche instrument into a force that could reshape the banking system, and U.S. banks now face a critical inflection point demanding rapid adaptation.