{"id":888457,"date":"2026-01-28T23:11:50","date_gmt":"2026-01-29T05:11:50","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2026\/01\/28\/are-stablecoins-quietly-draining-banks-standard-chartered-thinks-so\/"},"modified":"2026-01-28T23:11:50","modified_gmt":"2026-01-29T05:11:50","slug":"are-stablecoins-quietly-draining-banks-standard-chartered-thinks-so","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2026\/01\/28\/are-stablecoins-quietly-draining-banks-standard-chartered-thinks-so\/","title":{"rendered":"Are Stablecoins Quietly Draining Banks? Standard Chartered Thinks So"},"content":{"rendered":"
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\n Are Stablecoins Quietly Draining Banks? Standard Chartered Thinks So <\/h2>\n
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Journalist<\/p>\n

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Hassan Shittu<\/p>\n

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Journalist<\/p>\n

Hassan Shittu<\/span>\"Verified\"<\/span>\n <\/p>\n<\/p><\/div>\n

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Part of the Team Since<\/p>\n

Jun 2023<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n

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About Author<\/p>\n

Hassan, a Cryptonews.com journalist with 6+ years of experience in Web3 journalism, brings deep knowledge across Crypto, Web3 Gaming, NFTs, and Play-to-Earn sectors. His work has appeared in…<\/p>\n<\/p><\/div>\n<\/div><\/div>\n<\/p><\/div>\n

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Last updated:\u00a0<\/p>\n

\"Are<\/p>\n

For decades, bank deposits have been one of the quiet foundations of the financial system, supplying lenders with the low-cost funding needed to extend credit and support economic growth. <\/p>\n

Standard Chartered believes the risk of stablecoin slowly pulling money out of traditional accounts is real, even if it is unfolding gradually. <\/p>\n

In a recent analysis cited<\/a> by Bloomberg, the bank warned that as stablecoins continue to gain traction, as much as $500 billion in deposits could exit banks in developed markets by the end of 2028. <\/p>\n

Stablecoins Test Traditional Banking as Adoption Accelerates<\/span><\/h2>\n

Geoff Kendrick, Standard Chartered\u2019s global head of digital assets research, said the growing role of dollar-pegged tokens threatens to redirect funds into the digital asset ecosystem, particularly if upcoming U.S. legislation provides clearer regulatory footing<\/a>.<\/p>\n

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The numbers behind the concern are already taking shape. Stablecoin supply has climbed more than 40% over the past year to just over $300 billion, according<\/a> to DefiLlama data.<\/p>\n

Source: DefiLlama<\/a><\/em><\/figcaption><\/figure>\n

Standard Chartered estimates that U.S. bank deposits could fall by roughly one-third of total stablecoin market capitalization, with growth expected to accelerate if Congress passes the proposed CLARITY Act.<\/a><\/p>\n

The issue goes beyond payments alone. Kendrick noted that stablecoins are increasingly touching core banking functions, from transaction settlement to liquidity management. <\/p>\n

At the same time, a central point of tension between banks and crypto platforms is whether consumers should be allowed to earn rewards on stablecoin balances. <\/p>\n

Coinbase currently offers about 3.5% in rewards on holdings of Circle\u2019s USDC, a practice banking lobby groups argue could encourage deposit flight by making crypto balances more attractive than traditional accounts.<\/p>\n

Coinbase CEO Brian Armstrong<\/a> has publicly pushed back on that argument, saying banks are attempting to use regulation to block competition rather than protect consumers. <\/p>\n

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Standard Chartered Points to Deposit Sensitivity at Regional Lenders<\/span><\/h2>\n

Standard Chartered\u2019s analysis focused on net interest margin income as a share of total revenue, a metric closely tied to deposits. On that basis, regional U.S. banks appear more exposed than larger, diversified institutions. <\/p>\n

Among the 19 banks and brokerages reviewed, Huntington Bancshares, M&T Bank, Truist Financial, and Citizens Financial Group were identified as the most vulnerable. <\/p>\n

Regional lenders rely more heavily on deposits to fund loans, meaning even modest outflows could have an outsized impact.<\/p>\n

For now, markets suggest the threat is not immediate. U.S. bank deposits have rebounded after sharp declines in 2022 and early 2023, reaching<\/a> a record $18.72 trillion in December 2025. <\/p>\n

Core deposits grew by about<\/a> 4% in 2025, up from 1.5% the year before, supported by Federal Reserve rate cuts and a slowdown in quantitative tightening. <\/p>\n

Source: stlouisfed<\/a> <\/em><\/figcaption><\/figure>\n

Bank shares have also held up, with the KBW Regional Banking Index rising nearly 6% in January, compared with just over 1% for larger banks.<\/p>\n

Treasury-Backed Stablecoins Add New Twist to Deposit Debate<\/span><\/h2>\n

Still, Standard Chartered\u2019s global head of digital assets research, Geoff Kendrick, argues that the longer-term shift is difficult to ignore. If stablecoin market capitalization reaches $2 trillion, he estimates deposit losses could approach $500 billion.<\/p>\n

He also pointed out that reserve practices limit any recycling of funds back into the banking system. <\/p>\n

Tether and Circle, the two dominant issuers, hold just 0.02% and 14.5% of their reserves in bank deposits, meaning most backing assets sit in Treasury bills rather than traditional accounts.<\/p>\n

Not everyone agrees that stablecoins pose a destabilizing threat. In a recent Bloomberg opinion piece, historians Niall Ferguson and Manny Rincon-Cruz argued<\/a> that fears of deposit flight are overstated. <\/p>\n

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Since USDC launched in 2018, U.S. bank deposits have increased by more than $6 trillion, while stablecoins have grown by about $280 billion.<\/p>\n

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Are Stablecoins Quietly Draining Banks? Standard Chartered Thinks So Journalist Hassan Shittu Journalist Hassan Shittu Part of the Team Since Jun 2023 About Author Hassan, a Cryptonews.com journalist with 6+ years of experience in Web3 journalism, brings deep knowledge across Crypto, Web3 Gaming, NFTs, and Play-to-Earn sectors. His work has appeared in… Last updated:\u00a0 January<\/p>\n","protected":false},"author":1,"featured_media":888458,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[210,81731],"tags":[],"class_list":{"0":"post-888457","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-quietly","8":"category-stablecoins"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/888457","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=888457"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/888457\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/888458"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=888457"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=888457"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=888457"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}