Stablecoins are emerging as a direct risk to U.S. bank deposits, with regional banks facing the greatest exposure as payment activity and transactional balances increasingly migrate onto blockchain-based rails, according to a new research note by Standard Chartered.
The bank's global head of digital assets research Geoffrey Kendrick in a note on Tuesday argued that stablecoin adoption is no longer a challenge confined to emerging markets, but a structural issue for developed-market banks, including those in the United States.
As stablecoins take on functions traditionally performed by banks like payments, custody, and short-term value storage, they increasingly compete with demand deposits, which underpin banks’ net interest margins.
The note estimates that U.S. bank deposits could decline by roughly one-third of the total stablecoin market capitalization, highlighting the scale of potential displacement as digital dollars gain traction.
Regional Banks Face Disproportionate Exposure
Kendrick identifies net interest margin (NIM) income as a percentage of total revenue as the most accurate measure of exposure to stablecoins, given that deposits are the primary driver of NIM.
On this basis, regional U.S. banks appear significantly more vulnerable than diversified banks or investment banks, which rely more heavily on fee income, trading, and capital markets activity.
This distinction matters as stablecoins increasingly absorb low-yield transactional balances, precisely the type of deposits that regional banks depend on most.
Large, diversified banks are better insulated, while investment banks are the least exposed due to minimal reliance on deposit funding.
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CLARITY Act Delay Highlights Policy Tension
The report links the growing risk to recent developments around the U.S. CLARITY Act, which is intended to establish a regulatory framework for digital assets.
The latest Senate draft prohibits digital asset service providers from paying interest or yield on stablecoin holdings, a provision that prompted Coinbase to withdraw its support for the bill.
While the report still expects the CLARITY Act to pass by the end of the first quarter, the delay underscores the tension between regulating stablecoins as non-bank instruments and their increasing role in core banking functions.
Preventing yield on stablecoins may limit their resemblance to deposits, but does not address their role as payment and settlement tools.
A Shift In The Banking Risk Landscape
Kendrick’s analysis reframes stablecoins as a competitive force within the U.S. banking system itself, rather than a peripheral innovation.
As payment networks and liquidity move on-chain, deposit erosion becomes a balance-sheet issue, particularly for banks with concentrated exposure to traditional lending margins.
The report further stated that stablecoins are steadily unbundling one of banking’s core functions, with implications that extend beyond crypto markets into financial stability and bank profitability.
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