Concerns that crypto stablecoins will harm US banks by cannibalizing banking deposits are ill-placed and don’t consider the real-world uses of the tokens, according to Coinbase researchers.
“The ‘stablecoins will destroy bank lending’ narrative ignores reality,” Coinbase policy chief Faryar Shirzad said on Wednesday.
“Most stablecoin demand comes from outside the US, expanding dollar dominance globally, not competing with your local bank.”
Shirzad shared a market note that said the arguments over stablecoins' impact on bank deposits and lending “echo familiar worries from earlier innovations like money market funds. Yet they fail to account for how and where stablecoins are actually used.”
US banking groups have argued that stablecoins offering yield could compete with bank accounts and trigger bank outflows, and have urged Congress to clamp down on services offering yield on stablecoins.
Stablecoin Demand is Global, Not US-Centric
Coinbase argued in its note that the most demand for stablecoins comes from “international users seeking dollar exposure” and not from US consumers.
It said emerging markets use US dollar stablecoins to hedge against local currency depreciation, and the tokens are a “practical form of dollar access” for the underbanked.
The note added that around two-thirds of stablecoin transfers happen on decentralized finance or blockchain platforms. “In that sense, they are the transactional plumbing of a new financial layer that runs parallel to, but largely outside, the domestic banking system,” Coinbase said.
“Treating stablecoins as a threat misreads the moment: they strengthen the dollar's global role and unlock competitive advantages that the US shouldn’t constrain,” Shirzad said.
Community Banks Won't Collapse, Coinbase Claims
Coinbase argued the concerns that community banks will be hit hard by widespread stablecoin use also lack credence, explaining that the typical stablecoin user “is not the same as the typical community bank customer.”
“Community banks and stablecoin holders barely overlap,” Shirzad said, adding that banks “could improve their services with stablecoins.”
Coinbase also said forecasts of trillions of dollars flowing into stablecoins over the next 10 years “should be carefully scrutinized.”
“Even if stablecoin circulation reached $5 trillion globally, a majority of that value would still be foreign-held or locked in digital settlement systems, not diverted from US checking or savings accounts,” it said.
Coinbase noted that commercial bank deposits in the US exceed $18 trillion and claimed that the impact of stablecoin on deposits would “remain marginal, while the global influence of the US dollar would significantly increase.”
Multiple big banks and major financial institutions have launched stablecoin services or are exploring offers after the US passed the GENIUS Act earlier this year, which regulates how stablecoin service providers operate in the country.