Thomas Daniels
Coinbase has pushed back against claims that stablecoins are draining U.S. bank deposits, dismissing the idea of “deposit erosion” as an unfounded myth. In a statement published Tuesday, the crypto exchange argued that there is no evidence linking stablecoin adoption to a systemic outflow of bank deposits, particularly at the community banking level.
Stablecoins Are Payment Tools, Not Savings Accounts
The company emphasized that stablecoins serve as transactional instruments, not savings vehicles. According to Coinbase, purchasing stablecoins—such as for paying overseas suppliers—does not involve withdrawing deposits from banks but rather represents a shift toward faster and more efficient international payments.
Coinbase also took issue with a U.S. Treasury Borrowing Advisory Committee report that projected up to $6 trillion in potential deposit flight by 2028, despite forecasting a stablecoin market size of just $2 trillion. The company criticized the projection as mathematically inconsistent and exaggerated in scope.
Global Use of Stablecoins Reinforces Dollar Dominance
Coinbase underlined that the majority of stablecoin activity occurs outside the United States, particularly in regions with underdeveloped financial systems such as Asia, Latin America, and Africa. In 2024, more than half of the $2 trillion in stablecoin transactions took place abroad.
Because most leading stablecoins are pegged to the U.S. dollar, their global adoption strengthens the dollar’s international position. Rather than undermining domestic financial stability, Coinbase argues, the use of dollar-backed stablecoins abroad expands American monetary influence without compromising the availability of credit at home.
Banks Face Competition, Not Threats
Coinbase framed the debate around competition rather than risk, pointing out that banks generate approximately $187 billion annually from card swipe fees—an area where stablecoins offer a lower-cost alternative. The firm suggested that innovation, not regulation, should be the financial sector’s response.
Following the passage of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), the company observed that share prices of both crypto firms and banks rose in tandem—an indication, it claimed, that both industries can prosper simultaneously.
Nonetheless, traditional banking institutions have lobbied lawmakers to close regulatory loopholes in the GENIUS Act that could allow crypto firms or affiliated platforms to offer interest-like yields on stablecoins. Crypto industry associations have urged Congress to reject these proposals, warning that they would stifle innovation and entrench the competitive advantage of incumbent banks.
Strategic Implications for Finance
Coinbase’s response highlights a critical divide in how regulators and market participants view digital finance. On one side, banks warn of systemic risk and regulatory arbitrage. On the other, crypto firms argue that existing institutions fear competition and are using regulation to maintain market dominance.
The long-term trajectory of stablecoin adoption will likely depend on how well regulatory frameworks balance innovation with risk mitigation. The current debate may ultimately reshape not only the payments industry but also the role of the U.S. dollar in global finance.
