Coinbase pushed back against claims that stablecoins threaten the US banking system, calling the idea of “deposit erosion” a myth.
In a Tuesday blog post, the crypto exchange argued that fears over stablecoins draining bank deposits are unfounded. Coinbase claimed that “recent analysis” shows there is no meaningful link between stablecoin adoption and deposit outflows at community banks.
“Stablecoins don’t threaten lending — they offer a competitive alternative to banks’ $187 billion annual swipe-fee windfall,” the exchange wrote, adding that stablecoins are not savings accounts but payment tools. “Someone buying stablecoins to pay an overseas supplier isn’t reallocating their savings — they’re choosing a faster, cheaper payment method,” it added.
The company also challenged recent claims made in a US Treasury Borrowing Advisory Committee report, which projected $6 trillion in potential deposit flight, despite only forecasting a $2 trillion stablecoin market by 2028. “The math doesn’t add up,” Coinbase claimed.
Related: Bank of England stablecoin limits slammed by UK crypto groups: Report
Most stablecoin activity occurs outside the US
In an accompanying paper, Coinbase said that most stablecoin activity occurs internationally, especially in regions with weak financial infrastructure. The paper, citing the International Monetary Fund, stated that over $1 trillion of the $2 trillion stablecoin transactions in 2024 occurred outside the US, particularly in Asia, Latin America and Africa.
Since nearly all major stablecoins are dollar-pegged, their use abroad reinforces dollar dominance. Therefore, instead of eroding US deposits, stablecoins help expand the dollar’s global influence without significantly impacting domestic credit availability, the exchange argued.
It also said that correlations between bank stock performance and crypto firms like Coinbase and Circle were positive following the passage of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), showing that stablecoins and banks can thrive together.
Cointelegraph reached out to the Bank Policy Institute for comment, but had not received a response by publication.
Related: Yala’s YU stablecoin fails to restore peg after ‘attempted attack’
Banks need to improve their offerings
Last week, Bitwise’s investment chief Matt Hougan criticized US banks for complaining about stablecoin competition instead of improving their offerings, especially interest rates for depositors. He argued that banks have long exploited depositors by offering low yields and are now panicking as stablecoins offer better alternatives.
In August, US banking groups, led by the Bank Policy Institute, urged Congress to close a so-called loophole in the GENIUS Act that may allow stablecoin issuers to offer yields indirectly through crypto exchanges or affiliates.
In response, the Crypto Council for Innovation and Blockchain Association asked US lawmakers to reject the proposal, warning that the proposed revisions would tilt the field toward traditional banks while stifling innovation.
Magazine: Bitcoin vs stablecoins showdown looms as GENIUS Act nears