Standard Chartered has warned that accelerating stablecoin adoption could put as much as $500 billion of U.S. bank deposits at risk by the end of 2028, as payment activity and other core banking functions increasingly shift toward dollar-pegged digital tokens, according to Reuters.
The estimate was published in a research note by Geoffrey Kendrick, the bank’s global head of digital assets.
Stablecoin adoption seen as threat to core banking activity
Kendrick said U.S. banks face growing competition as payment networks and other traditional banking services migrate to stablecoin-based systems.
The analysis was based on lenders’ net interest margin income — the spread between what banks earn on loans and what they pay out on deposits.
Stablecoin law left yield debate unresolved
The report comes after President Donald Trump signed a federal regulatory framework for stablecoins into law last year, legislation widely expected to accelerate broader use of dollar-pegged tokens.
While the law prohibited stablecoin issuers themselves from paying interest, banks have argued it left open a potential loophole allowing third parties — such as crypto exchanges — to offer yield on stablecoin holdings.
Banking lobbyists have warned that unless Congress closes that gap, lenders could face significant deposit outflows, raising financial stability concerns.
Crypto companies have pushed back, arguing that restricting stablecoin-related yield would be anti-competitive.
Senate Banking Committee vote postponed amid dispute
Disagreement over how lawmakers should address banks’ concerns has already delayed progress on broader crypto legislation.
A hearing and vote in the Senate Banking Committee was postponed earlier this month, in part due to unresolved debate over stablecoin yield treatment.
Reserve structure may determine the scale of deposit outflows
Kendrick noted that the scale of deposit risk depends on where stablecoin issuers hold their reserves.
If reserves remain within the U.S. banking system, potential deposit flight could be reduced. However, Kendrick said the two largest stablecoin issuers — Tether and Circle — currently hold most reserves in U.S. Treasuries, meaning limited re-depositing into banks is occurring.
