Crypto: Banks Fear Stablecoin ‘bank Run,’ Regulators See Limited Impact

Banks warn stablecoins could siphon deposits from the banking system, but policy and regulatory experts say there’s little evidence of it happening yet.

Banks warn that stablecoins, especially those paying yield, could pull deposits out of the banking system, but policy and finance experts say there’s little evidence of that so far.

Major US bank Standard Chartered recently estimated in a research note that increasing stablecoin adoption could drain bank deposits. The report estimates “that US bank deposits will decrease by one-third of stablecoin market cap,” which stood at $308.15 billion at time of writing, according to DeFiLlama data.

The debate has intensified as US lawmakers weigh whether to prohibit interest on stablecoin holdings under a proposed version of the crypto market structure bill, or CLARITY Act, which has been delayed by protests from inside the crypto industry despite banking sector support.

Banks argue that allowing yield-bearing stablecoins could accelerate deposit flight, while critics say the risk remains largely theoretical.

Aaron Klein, a senior fellow in economic studies at the policy research institution Brookings, told Cointelegraph that so far, stablecoins have primarily been used for crypto-related activities and as a store of value in non-dollar countries. “You will find little evidence that stablecoins have drained bank deposits,” he said.

Related: US bank lobby says stopping stablecoin yields a top 2026 priority

European regulators may share a similar view. A representative of the European Banking Authority (EBA) said stablecoins in the European Union are mainly treated as payment instruments within the crypto ecosystem and remain lightly used by consumers. “Because of low engagement in [or] use of stablecoins currently within the EU, we do not see current currency substitution, capital flight or dollarisation risks,” they said.

Still, Klein suggested that this is subject to change. He highlighted that what can be found are “arguments that if stablecoins take off as their supporters claim they will, then it will likely result in a drain in bank deposits.”

Klein said this would reduce capital availability, as “bank deposits support bank lending, so reduced bank deposits reduce the supply of credit available through bank-based products.”

Source: CoinTelegraph