Coinbase Debunks Claims That Stablecoins Are Draining U.S. Bank Deposits

Coinbase has firmly rejected accusations that stablecoins are leading to a decline in U.S. bank deposits, arguing instead that stablecoin activity strengthens the global prominence of the U.S. dollar. In a blog post published Tuesday, the cryptocurrency exchange labeled concerns about stablecoins threatening the U.S. banking system as “unfounded” and dismissed fears of deposit outflows as “a myth.”

Examining the Link Between Stablecoins and Deposit Outflows

Coinbase highlighted recent analyses showing no substantial evidence linking stablecoin adoption to deposit outflows from U.S. regional banks. The exchange argued that stablecoins do not disrupt traditional banking systems; instead, they introduce healthy competition, particularly in the realm of credit card fees, which currently represent a massive $187 billion annual market.

Unlike savings accounts designed for returns, stablecoins are primarily utilized as a payment mechanism, Coinbase emphasized. For instance, when businesses acquire stablecoins to pay international suppliers, they are not “transferring” savings but opting for faster and more cost-efficient transaction methods.

Inconsistent Stability Concerns Around Stablecoins

The U.S. Treasury’s Borrowing Advisory Committee has sounded the alarm on stablecoin-related risks while issuing projections that Coinbase called inconsistent and empirically unsupported. The advisory committee has predicted that stablecoin market growth would plateau at $2 trillion by 2028 while simultaneously speculating about potential outflows of $6 trillion from traditional bank deposits. Coinbase criticized this disparity as a contradiction lacking factual basis.

Stablecoin Adoption Predominantly Occurs Offshore

Data released alongside Coinbase's blog post highlighted that stablecoin transactions and adoption are concentrated outside the United States. According to the International Monetary Fund (IMF), the majority of stablecoin transaction volume stems from regions with weaker financial infrastructure, such as Asia, Latin America, and Africa. In fact, of the estimated $2 trillion stablecoin market volume by 2024, over $1 trillion has already been recorded in these regions.

Coinbase further argued that stablecoins—being pegged predominantly to the U.S. dollar—enhance, rather than diminish, the dollar's global dominance. Their use abroad, Coinbase suggested, strengthens the international position of the dollar without adversely affecting domestic deposit supplies or loan availability in the U.S.

Positive trends in financial markets also reinforce Coinbase’s stance. The company pointed to improved correlations between the stock performances of banks and cryptocurrency firms like Coinbase and Circle following the passing of the U.S. Stablecoin Act (GENIUS Act). These data points, Coinbase argued, illustrate a cooperative growth trajectory where banks and stablecoins can coexist harmoniously.

Calls for Better Banking Services Amid Stablecoin Growth

Beyond Coinbase’s rebuttals, industry leaders are voicing frustrations over the banking sector's resistance to stablecoin competition. Matt Hougan, Chief Investment Officer at Bitwise, expressed a sharp critique of U.S. banks, asserting that rather than complaining about stablecoins, banks should focus on offering improved services and more competitive interest rates to depositors.

Hougan alleged that banks have long exploited depositors with subpar interest rates and are now struggling to retain customers as stablecoins provide consumers and businesses with a compelling alternative. To remain competitive, he suggested, banks must prioritize innovation and customer-centric improvements.

Stablecoin Legislation Faces Pushback from the Banking Lobby

Amid the expanding relevance of stablecoins, traditional banks have ramped up lobbying efforts to limit the sector’s growth. In August, banking groups petitioned Congress to close what they described as “loopholes” in the GENIUS Act, arguing that stablecoin issuers might indirectly offer higher yields through crypto exchanges or affiliates.

Countering these claims, the Crypto Innovation Council and Blockchain Association urged lawmakers to reject banking lobby proposals, warning that such restrictions would halt innovation and disproportionately benefit legacy financial institutions. These groups emphasized that a fair regulatory framework is crucial to ensuring stablecoin technology reaches its full potential.

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