Today in Crypto: Stablecoin growth could drain bank deposits, with regional US banks most exposed, Standard Chartered’s Geoff Kendrick warned, Bitcoin network hashrate dropped over the weekend during a massive winter storm in the US, and lawmakers delayed work on digital asset legislation due to the same severe weather.
Stablecoins a threat to bank deposits: Standard Chartered
Stablecoins pose a real risk to bank deposits both globally and in the United States, according to a new report by Standard Chartered analysts.
The delay of the US CLARITY Act — a bill proposing to prohibit interest on stablecoin holdings — is a “reminder that stablecoins pose a risk to banks,” Geoff Kendrick, global head of digital assets research at Standard Chartered, said in a report on Tuesday seen by Cointelegraph.
“We estimate that US bank deposits will decrease by one-third of stablecoin market cap,” the analyst said, referring to a $301.4 billion market of US dollar-pegged stablecoins, as measured by CoinGecko.
Standard Chartered’s findings add to the CLARITY Act debate amid companies like Coinbase withdrawing support, and Circle CEO Jeremy Allaire dismissing fears of stablecoin-driven bank runs as “totally absurd.”
In the report, Kendrick highlighted net interest margin (NIM) income — a key profitability metric that measures the difference between interest earned and interest paid, divided by average interest-earning assets.
“NIM income as a percentage of total bank revenue is the most accurate measure of this risk because deposits drive NIM, and they risk leaving banks as a result of stablecoin adoption,” Kendrick said.
“We find that regional US banks are more exposed on this measure than diversified banks and investment banks, which are least exposed,” he added, citing Huntington Bancshares, M&T Bank, Truist Financial and CFG Bank as the most exposed.
Bitcoin hashrate drops amid US winter storm
Bitcoin network hashrate hit a seven-month low over the weekend as a massive winter storm bombarded the United States with snow and ice, pushing miners to curtail operations to stabilize the energy grid.
American weather forecasting company AccuWeather reported on Monday that the massive winter storm affected three dozen states over the weekend, with widespread snow, ice, and power outages affecting one million energy customers.
Data from mining data tool CoinWarz shows that Bitcoin’s network hashrate began to drop on Friday, and by Sunday, it hit 663 exahashes per second (EH/s) — a more than 40% slump in hashrate across two days.
However, it has since begun to recover and is sitting around 854 EH/s as of Monday.
“Approximately 40% of global Bitcoin mining capacity has gone offline in the past 24 hours due to extreme winter weather,” said Abundant Mines, a Bitcoin miner based in Oregon.
The US contributes the largest amount of the world’s Bitcoin mining power, with Bitcoin mining data platform Hashrate Index estimating the country contributes nearly 38% of the global hashrate.
Work delayed on US market structure bill, crypto regulation amid winter storm
The US Senate Agriculture Committee and two federal financial agencies have delayed events related to digital asset regulation amid a winter storm that paralyzed many areas of the country over the weekend.
A spokesperson for Senate Agriculture Committee Chair John Boozman told Cointelegraph on Monday that the body would push a scheduled markup for its version of a crypto market structure bill to Thursday from Tuesday. The bill, called the Digital Commodity Intermediaries Act, is the committee’s attempt to establish clear rules for the Commodity Futures Trading Commission (CFTC) over digital assets.
In addition to the delay in Congress, the CFTC said on Monday that a joint event on crypto oversight harmonization with the US Securities and Exchange Commission (SEC) would be delayed by two days, to Thursday. CFTC Chair Michael Selig and SEC Chair Paul Atkins are scheduled to discuss “harmonization between the two agencies” on digital assets.
Although neither notice explicitly mentioned the reason for the delays, they were likely due to a winter storm that hit many areas of the US over the weekend, causing power outages, icy conditions and canceled flights. Reports from Washington, D.C., described “treacherous road conditions” and a majority of schools closed.
